Equity Office Properties Trust Acquires Denver Office Towers in $394 Million Deal

Equity Office Properties Trust, a Chicago-based real estate investment trust, has announced a $394 million purchase of some of the most prized office towers in Denver and the southeast suburbs. The acquisition includes nine buildings in downtown Denver and the suburbs and four in Albuquerque, and is expected to close in phases. This deal is the second-largest in Denver's history, following the 1982 sale of the City Center complex to Prudential Insurance Co. for about $700 million.

Key Takeaways:

• The purchase includes nine buildings in downtown Denver and the suburbs, and four in Albuquerque, with a total value of approximately $394 million.
• Equity Office Properties Trust is acquiring some of the most prized office towers in Denver, including One Tabor Center, a crown jewel of downtown office complexes.
• The acquisition is expected to close in phases, with the first phase closing soon.
• The downtown office vacancy rate is 7.7%, the lowest in over 15 years, making this a prime time for investment.
• Myron "Micky" Miller's Miller Global Properties LLC is selling about 40% of its Denver-area holdings as part of the deal.
• Equity Office also acquired The Denver Post Tower in a separate deal last week for $53 million.
• The purchase is fueled by cheap Wall Street money, as both Equity Office and the seller, Mack-Cali, are REITs.
• David Naus, a representative of Equity Office, stated that the company is "buying at the cusp" of the market.
• Myron Miller will continue to develop and own properties in several other cities, including Portland, Ore., San Diego, Austin, Texas, Houston, St. Louis, Chicago, and suburban Washington, D.C.

Statistics:

• The acquisition is valued at approximately $394 million.
• The downtown office vacancy rate is 7.7%, the lowest in over 15 years.
• The replacement cost of the downtown buildings is estimated to be $200 per square foot or more.
• The replacement cost of the suburban properties is estimated to be about $170 per square foot.
• The only larger deal in Denver's history was in 1982, when Miller and former oilman Marvin Davis sold the City Center complex for about $700 million.
• Equity Office Properties Trust also acquired The Denver Post Tower in a separate deal for $53 million.

Sources:

• "Equity Office Properties Trust to acquire some of Denver's prized office towers", John Rebchook, Rocky Mountain News
• Brad Neiman, top broker at CB Commercial, referenced in the article.
• David Naus, representative of Equity Office, quoted in the article.
• Equity Office Properties Trust, press release announcing the acquisition.