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Author: Don Obrien

Office portfolio fetches $91M | Finance & Commerce


A portfolio of Twin Cities office buildings has traded hands for about $91 million — making it one of the largest single-story office transactions in the metro to date.

DRA Advisors LLC purchased the seven-building portfolio from Minneapolis-based Eagle Ridge Partners in a sale that closed in late September. The properties are a mixture of office, warehouse and med-tech uses in Plymouth, Golden Valley and Minnetonka, according to electronic certificates of real estate value published last week.

It’s among the largest single-story, office building portfolio transactions in the market’s history, according to Eagle Ridge.

“I think it’s … a testament to the institutional interest in Minneapolis-St. Paul real estate market, in general,” said Shannon Van Gemert, managing director and principal with Eagle Ridge.

“Driving this interest is the metro’s stable, diverse economy, which is home to numerous Fortune 500 companies. It has also experienced mostly great unemployment rates, Van Gemert said.”

“When you are able to come to market with something of this size when we did and in a product type that I think is really getting a lot of attention … I think it was attractive to a handful of people,” she said. “When you get up to $90 million plus … it’s not that everyone can write that check. But for those that understand the market and understand the product, I think it was a very attractive investment for them.”

Eagle Ridge is a development, acquisition and asset-management company, with a portfolio of more than 3 million square feet of space in the Twin Cities.

The Northwest Business Campus I, II and III in Plymouth were included in the sale. They’re located at 2905 Northwest Blvd., 2800 Campus Drive and 2955 Xenium Lane N. in the Northwest suburb. The grouping of properties is northeast of the Interstate 494 and Highway 55 interchange.

Northwest Business Campus I sold for $12.069 million. The building has nearly 85,000 square feet. Constructed in 1985, the building is over 87% leased, according to CoStar and eCRV information.

The second Northwest building, with less than 66,000 square feet, sold for $9.385 million. The 1986 building has several medical tenants. The approximately 25,000-square-foot third Northwest campus building was constructed in 1986 and sold for $3.546 million, according to information from the eCRVs and CoStar.

In Golden Valley, the Golden Hills Business Park I, II and III changed hands in the portfolio transaction. Located at 5900-5980, 6100-6190 and 6105 Golden Hills Drive, the properties are north of Interstate 394 as well as the West End shopping area in St. Louis Park.

Golden Hills Business Park I sold for $18.17 million. It has over 92,000 square feet and was constructed in 1995. The second Golden Hills building sold for $15.71 million and has almost 80,000 square feet of office and industrial space in the 1999 building. The third Golden Hills building has over 87,000 square feet, which sold for $17.67 million, according to information from the eCRVs, CoStar and Eagle Ridge.

The Minnetonka property, at 5600-5610 Rowland Road, sold for $14.5 million. The property, called Rowland Pond I and II, has less than 121,000 square feet and is nearly 96% leased. Built in 1988, it’s east of Interstate 494. UnitedHealth Group’s offices are directly south of the property.

The properties were able to retain most tenants during the pandemic, thanks to low operating expenses for tenants and their ability to reconfigure spaces to suit their needs. The portfolio, overall, was 96% occupied when sold, Van Gemert said.

“This product type is viewed very favorably with the capital markets,” she said. “When you come in with the leasing track record, the occupancy, the condition of the buildings, … and the current tenants that we have in there, I think our buyer or anyone who is looking at it probably had some very attractive financing to go along with it.”

DRA Advisors didn’t return a request for comment by publication time. It operated as variations of “G&I X Med Tech” in the transactions. The New York-based investment advisory firm has a portfolio of $11.2 billion as of the end of 2020. It provides real estate investment and management services for institutional and private investors, according to its website.

Late last month, DRA Advisors made another major Twin Cities purchase with its acquisition of the Equinox apartments in St. Anthony. It purchased the nine-building, 266-unit complex for $43.75 million. The property is located at 2808 Silver Lane and the seller was Chicago-based Laramar, according to eCRV and Costar information.

Another portfolio of office buildings traded hands earlier this year for $113.2 million. Monarch Alternative Capital LP and Detroit-based Crestlight Capital purchased the portfolio of North Loop, multistory buildings from Swervo Development Corp. The buildings are located at 241 N. Fifth Ave., 411 Washington Ave. N. and 500 N. Third St., Finance & Commerce reported.

In a May interview, Eagle Ridge President Kristin Myhre told Finance & Commerce that they’re seeing “very strong demand” for their flex products.

“People are moving out of multitenant, suburban office into what would be a single-story office,” Myhre said. “They want the ability to control what they’re doing for HVAC, how quickly they’re changing, or how frequently they’re changing air filters. Are they doing ionization? What are they doing for sanitation in their space? And then they know it’s just their own employees that they’re interacting with: You drive up, you park, you walk in your front door.”

 



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