Exclusive: Starwood confirmed as CTC portfolio buyer

LOUISVILLE — Starwood Capital Group, a Miami-based private investment group, is the buyer of Etkin Johnson Real Estate Partners’ Colorado Technology Center portfolio.

“Over the past decade, we have had great experience investing in the Denver market and are excited to expand our local portfolio with these high-quality, well-located assets,” Starwood managing director David Baker told BizWest in an emailed statement. “The Colorado Technology Center is Starwood Capital’s first industrial investment in Denver, and we look forward to building on the park’s well established track record of success.”

Etkin Johnson, which is winding down operations after the portfolio sale, offloaded its remaining 16 properties in the Louisville business park to Starwood for just less than $393 million, the largest sale by dollar volume in Colorado history.

Etkin Johnson announced the sale Wednesday but declined to name the buyer. The sale had yet to be recorded with Boulder County, so public records revealing the buyer were unavailable. 

BizWest determined that Starwood could be the buyer due to 20 Starwood-linked limited liability companies with names that include the CTC properties’ addresses or other references to CTC having been registered with the Colorado Secretary of State’s office in recent weeks.

The CTC portfolio encompasses 1.67 million square feet.

“These are certainly strong numbers,” Freeman Myre Inc. managing member and broker Andrew Freeman said of the size of the portfolio and its record-setting price tag. “It’s great real estate and a really strong location. There’s a lot of national and international investment interest in this market.”

Freeman said he’s not surprised that a large institutional investor such as Starwood would end up with Etkin Johnson’s portfolio as these groups are the only players with pockets deep enough to make that kind of splash.  

Starwood has more than $75 billion in assets under management, and while the CTC portfolio is its first industrial holding in the Boulder Valley and greater Denver region, the company owns several hotel and multi-family residential properties. 

In early 2019, Starwood bought Hyatt Place at Boulder Junction at 2280 Junction Place for $50.45 million and a year later scooped up Riverwalk Apartments at 744 Mockingbird St. in Brighton for $24.6 million.

Starwood is making moves in the industrial real estate market because it is “thriving due to the impact of e-commerce and the related demand for last mile logistics locations,” according to a company prospectus. 

While $393 million struck Freeman as a reasonable price for the CTC portfolio, he said he suspects Etkin Johnson “probably had quite a few groups competing for it and went through a few rounds [of negotiations] before Starwood won the deal.”

He anticipates that Starwood will likely spend additional money on improvements within the business park upon taking ownership.

Indeed, part of Starwood’s strategy involves buying and improving distressed or underperforming assets in prime locations, according to company documents.

A move the size of Starwood’s CTC purchase is sure to have ripple effects in the wider commercial real estate market, Freeman said.  

Because many commercial properties in the Boulder Valley are owned and managed by the development group that built them, “rents in the area have remained fairly low compared with Denver and other markets where a lot of the portfolios have sold two or three times,” Freeman said. “Each time a buyer comes in and pays more, that generally means they have to increase rents.”

He expects that Starwood “will have to raise its rents to hit its yields, which will have an impact on other parts of the market and cause rents to climb.”

Still, Freeman said he expects Boulder County to remain a competitive office and industrial market given the strong local talent pool that puts a premium on living and working in the area. 

© 2021 BizWest Media LLC

on Facebook on LinkedIn