In March of 2007, 246 South Taylor was purchased as a “value add” investment with a group of local investors with the intent of a long-term hold. Prior to the acquisition, our brokerage arm (The Colorado Group, Inc.) had been the listing agency on the building and were working for the owners to either lease or sell the asset due to the fact that the historical tenant was vacating the entire property. We had expressed an interest in purchasing the building prior to it being exposed to the entire market; however, the owners wanted to begin to get the property stabilized in order to increase the perceived value and consider us as a potential buyer. After assisting the owners in finding two tenants to take the building up to roughly 77% occupancy, they approached us and proposed a purchase that met both parties’ investment parameters. Our ability to have a pulse on the brokerage community clearly afforded us the opportunity to purchase this asset.
The Building is located in The Colorado Tech Center in Louisville, Colorado. It is a single story 39,300 square foot building that was leased to Vaisala, Inc. and JDS Uniphase on long term leases at the time of acquisition. Within short order of closing, we were able to secure a lease for the remaining 23% of the building on a 10 year lease to Alion Science and Technology to be utilized as their disaster recovery data center. The tenant infused nearly one million dollars into their tenant finish package, which provides the Landlord with a high level of confidence that the tenant will remain in the property for years to come. In June of 2008, JDS Uniphase shut down operations in Boulder and put their space on the market for sublease. Within a few weeks, we were able to assist Vaisala (the neighboring tenant) in securing the sublease space, which brought their total square footage in the property to roughly 31,000 square feet. Vaisala and Alion continue to operate their businesses in the property and we still hold the asset in our portfolio today. During the investment cycle, the property was refinanced and the Investors had one third of their original equity returned as a return of capital. The property continues to generate a healthy distribution for the Investors equal to 10% cash on cash return on the remaining equity.