March 4, 2005

Pratt negotiating sale of 2 million sq. ft. of space

LONGMONT ? Pratt Property Management Inc.?s possible sale of approximately 2 million square feet of commercial and industrial real estate in Longmont could close as early as April, local real estate sources say.

Sources told The Boulder County Business Report that the buyer is Circle Capital Longmont LLC, which is based in Denver, and the deal could be worth about $130 million, making it one of the largest commercial deals in Boulder County?s history.

According to Colorado Secretary of State documents, Circle Capital was formed in early February 2005. The names of R. Randall Clark and Barry Permut, both with offices in Denver, are listed as registered agents representing Circle Capital.

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?I?m aware of the buyers,? said Becky Gamble, president of Boulder-based Dean Callan & Co. ?They are relatively local and experienced.? Gamble declined to name the potential buyers, but said they will operate as one company.

Permut, an attorney with the Denver law firm Issacson, Rosenbaum, Woods & Levy and a member of its Real Estate and Transaction Group, referred all questions to Pratt owner Susan Pratt.
Pratt management declined to comment.

Pratt?s properties encompass approximately 2 million square feet of office, research and development and industrial space located mostly in southwest Longmont. Some of its 80-plus tenants include Maxtor, Front Range Community College and Breakthrough Management Co.
Earlier this year, Pratt signed on a significant tenant, Copan Systems, to lease 35,000 square feet at the former site of DigitalGlobe at 1900 Pike St.

Real estate sources said Pratt?s properties have been quietly on the market since last fall, with at least four potential buyers in the mix.

What a new buyer would do with the Pratt portfolio remains a matter of speculation.
?One group was looking at buying the whole thing,? a source said. ?Their modus operandi, and I don?t know if it?s this new group (Circle Capital) or not ? was to get the whole thing, spin off a couple of the leased properties to a REIT, getting those out of the portfolio and some of their money back.?

The source said he had heard a price tag last fall of around $150 million to $160 million ?My hunch is that number may have gotten lower,? he said.

Another real estate source said the properties were appraised in early 2003 at $127 million.
Don Roulley with Prudential LTM Realtors in Longmont estimated that Pratt?s properties could be worth anywhere from $70 to $100 per square foot. Using those rates, 2 million square feet would sell for $140 million to $200 million.

Few real estate experts would speculate on why Pratt Management has decided to sell, but two said continuing high vacancy rates in what has been a slow industrial market along the Front Range may be part of the reason.

The average vacancy rate in Longmont for office, flex and industrial space stands at 19.6 percent, according to fourth-quarter statistics collected by the Longmont Area Economic Council headed by John Cody. Cody declined to estimate Pratt?s vacancy rate, but confirmed the company owns about 2 million of a total 10 million square feet of primary employer space in Longmont.

?Just paying the property taxes? on vacant space can be difficult, Roulley said. ?I know there are a couple of large tenants on the horizon ? around 300,000 square feet ? interested in some of the Pratt properties. If someone were to buy the portfolio, I think it wouldn?t be long until the vacancy rate improves,? he said.

If Circle Capital can close the deal, Roulley said he doesn?t see the Denver-based company selling off many properties. ?It?s my understanding that they will be a hands-on company,? he said.
Longmont developer David Chaknova said the possible sale of Pratt?s properties could be good for the Longmont economy.

?If it does sell, and the buyers have some capital, then they can hopefully infuse some new blood and life into the properties,? he said. ?She?s (Susan Pratt) selling at the bottom of the industrial market, so it could be a good deal if the buyers feel that the economy is improving.?

Gamble said she thinks the prospective buyers will be positive for the market.

?They understand the dynamics of the market,? she said. As far as Gamble?s heard, the buyers will make a bid on all 2 million square feet. Other sources have said that Pratt may keep a few properties.

Pratt?s hospitality campus, which is not expected to be part of the sale, includes the Hawthorn Suites, the Radisson Hotel and Conference Center, Longmont/Boulder and the Whetstone Restaurant. Pratt also owns land in Grand County, Erie and Johnstown.

Pratt presently has two large vacant land properties for sale in Weld County. One property is 340 acres and the other is 68 acres. The asking price for each property is about $17.4 million, according to Pratt?s Web site.

Gamble said she thinks it?s important for whoever buys the Pratt properties to remain a strong player in the Longmont community, ?What the Pratts have accomplished in Longmont speaks for itself,? Gamble said. ?They?ve done a wonderful job at being part of the community.?

?Susan is an aggressive and smart lady,? Roulley said. ?I could see her making power plays in other markets, maybe even outside Colorado.?

One sign of change came last July when Pratt announced it was partnering with Denver-based CB Richard Ellis to help market its properties in Longmont. At the time, Susan Pratt said she was looking to work closely together with CB Richard Ellis to pursue an aggressive marketing plan. For most of its history, Pratt has managed its leasing and business entirely with its own staff.

Susan Pratt took over management of the company after her husband, Ken, died from cancer in 1995, and since then Pratt Property Management has been ranked as one of the largest women-owned businesses in the Boulder County, listing revenues of $32 million in 2003.

Active in numerous community causes, she established the Susan M. Pratt Foundation and has served as the chairwoman of CTEK Ventures Centers, donating office space and helping to establish CTEK Ventures Longmont to assist business startups.

Pratt Property Management?s roots go back nearly a century when in 1912 Marion Edward Pratt opened his real estate business in Longmont.

His son Harold Pratt eventually took over the company and focused on residential developments including Longmont Estates. Harold Pratt?s son, Ken Pratt, took over the business in 1969 and shifted the company?s focus to commercial space. In 1980, Ken married Susan, and the couple ran the company together. Both Ken and Susan have been inducted into the Boulder County Business Hall of Fame.

In the 1980s, the company helped the city develop an economic initiative with Japanese companies, which helped attract major employers such as Solbourne/Matsushita and Fujitsu/Intellistor. At one time, six Japanese-based high-tech companies had Longmont operations. The momentum, city officials said, then helped attract other major companies.

Contact David Clucas at (303) 440-4950 or e-mail dclucas@bcbr.com.

LONGMONT ? Pratt Property Management Inc.?s possible sale of approximately 2 million square feet of commercial and industrial real estate in Longmont could close as early as April, local real estate sources say.

Sources told The Boulder County Business Report that the buyer is Circle Capital Longmont LLC, which is based in Denver, and the deal could be worth about $130 million, making it one of the largest commercial deals in Boulder County?s history.

According to Colorado Secretary of State documents, Circle Capital was formed in early February 2005. The names of R. Randall Clark and Barry Permut, both with offices…

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