BOULDER, Colo. – Velocis Advisors, the asset management and advisory service division of Velocis, has sold 5775 Flatiron Parkway, a 96,267-square-foot office building located in Boulder’s Flatiron Business Park. Velocis Advisors sold the building on behalf of its client, a Dallas-based family office, to Menlo Equities for an undisclosed price.Velocis Advisors purchased the property on behalf of its client in 2014 and provided asset management services throughout the investment. During this time, they initiated the transition of the asset from multi-tenant to single-tenant by negotiating a long-term lease renewal and expansion with the building’s anchor tenant, IHS Markit Ltd. IHS Markit Ltd. is expanding its footprint until 2018, when it will occupy 100 percent of the property.
Velocis Advisors purchased the property on behalf of its client in 2014 and provided asset management services throughout the investment. During this time, they initiated the transition of the asset from multi-tenant to single-tenant by negotiating a long-term lease renewal and expansion with the building’s anchor tenant, IHS Markit Ltd. IHS Markit Ltd. is expanding its footprint until 2018, when it will occupy 100 percent of the property.
“Velocis Advisors sourced this acquisition for our client based on its strong tenancy and income-producing potential,” said Paul Smith, Velocis Advisors Principal. “By identifying the opportunity to evolve the property into a true, single-tenant building, we were able to add significant value to the asset. Ultimately, that value was realized through the sale of the property to Menlo Equities.”
The two-story office building sits on 5.2 acres in one of just two planned business parks within Boulder’s city limits, two miles from downtown. The property is currently 100 percent leased.
John Jugl with Newmark Grubb Knight Frank and Mary Sullivan with HFF represented the seller in the transaction.
Shirlington Becomes Viable Non-Metro Option
Velocis, a Dallas-based PE real estate manager, and Moore & Associates, a Bethesda-based sponsor, announced this week they bought Shirlington Tower, a Class-A 233k SF office building at 2900 South Quincy St.
The closest Metro stops are King Street, across the highway in Alexandria and Pentagon up 395. But the residential and retail amenities on the ground are what investors are hoping will fill up the 50% of the building that’s currently empty.
Velocis principal Mike Lewis (here with his daughters in Paris) says even though a Metro isn’t nearby, the eight-minute bus service to Pentagon station is used by Shirlington Tower tenants, who use apps to tell them when the bus is coming.
He added that the LEED Gold building is a well-located asset in the recovering Northern Virginia market, at a significant discount to replacement cost. (The company would not disclose the purchase price.)
This is the fund’s second acquisition in Northern Virginia this year, with the first being Loudoun Gateway II and III, two Class-A office buildings, in August. Mike says he’ll be in the DC area next week looking for more acquisitions. Velocis has $140M in equity and is targeting $300M for the fund, which will close next year. Dallas PE Manager Picks Up Shirlington Tower.
Moore & Associates VP Zac Vuncannon, right, with colleagues Lloyd Moore and Vince Coviello, says the 15-year-old building’s lobby and common areas will be refreshed. Among Shirlington’s amenities are a Harris Teeter, a movie theater, an Arlington County library and a Hilton Garden Inn. The office building also includes an attached six-story, 827-space parking garage, fitness club, restaurant and salon. The I-395 corridor’s overall vacancy is at 31.4%, with 5M SF of existing inventory, according to Colliers’ Q3 report. Zac was recently hired by the firm to oversee investments in the DC region and Austin, TX.
Velocis Finds Another Asset It Likes in NoVa
Other than that the two properties — Shirlington Tower in Arlington, VA, which it just acquired and two Class A office buildings in the Loudoun Gateway Business Park — bear little similarity to each other even though they are being financed via the same fund. Shirlington Tower is a lease-up play, while the Loudoun properties are a cash-flow play with significant upside, Paul Smith, a Velocis principal, told GlobeSt.com.
Well, there is one other commonality between the two: they both were reasonably priced. A few years ago, when Velocis was looking for investments for a prior fund, the Northern Virginia market was included in the target cities. “We felt that the impact of sequestration and BRAC had not been fully absorbed by the market then,” Smith says. “In addition, we didn’t see much job growth either.” Now, however, he said it is clear that the DC area has bottomed and prices have adjusted.
Of course, another reason why Velocis might not have found just the right Northern Virginia asset for Fund I was that the company is “incredibly picky,” Smith says.
For Fund I the company underwrote 700 assets in order to winnow down the selection to the 16 it ultimately acquired.
This processes hasn’t changed for Fund II, which is still in the middle of an equity raise. So far the company has purchased four buildings, two of which from Northern Virginia, after underwriting 300 possible acquisitions.
Fund II is seeking to raise $300 million and expects to lever that to $850 million in purchasing power. It is targeting opportunities in office, medical office and retail assets have a “value-add orientation,” Smith said. It is focusing on 10 target markets.
For its latest acquisition in the area, Velocis teamed up with the Bethesda-based Moore & Associates to purchase Shirlington Tower, a 233,446-square-foot office that is only 48% leased. It is the company’s third deal with Moore & Associates, which will be managing and leasing the building. “The institutional owner did an excellent job maintaining the property and we were intrigued with its quality and location,” Smith said.
The Loudoun Gateway Business Park assets were a different story, Smith said. “We saw the buildings as having an attractive going-in cap rate with an interesting tenancy.”
“Then as we dug into story there we thought we had a good chance to complete the lease up that the seller had started.”
The two interconnected buildings are currently more than 90% leased by government contractors.
Velocis Unveils Second Office Acquisition in Virginia
Dallas-based Velocis, a private equity real estate manager, and its joint venture partner Moore & Associates, a Bethesda, Md.-based local sponsor, have announced the purchase of Shirlington Tower, a Class A, 233,446-square-foot office building in Arlington, Va. Terms of the transaction were not disclosed.
Shirlington Tower in Arlington, Va.
Shirlington Tower in Arlington, Va.
In addition to the nearly half-occupied LEED Gold office building, the property comprises an attached six-story, 827-space parking garage that provides tenants with an above-average parking ratio. On-site amenities include a fitness club, restaurant and salon.
Shirlington Tower is situated adjacent to Interstate 395 and just one exit from the Pentagon. The property is also within walking distance to the amenity-rich Village at Shirlington shopping center, an outdoor mall featuring shopping and dining options, as well as a spa, cinema, hotel and Metro bus station.
The transaction marks the fund’s second acquisition in Northern Virginia this year. Earlier in August, the fund also purchased Loudon Gateway II and III, two Class A suburban office buildings located in the upscale Washington, D.C. suburb of Sterling, Va., in Loudoun Gateway Business Park.
“At just 48 percent leased, Shirlington Tower offers Velocis the opportunity to acquire a Class A, well-located asset in the recovering Northern Virginia market at a significant discount to replacement cost,” said Velocis Principal Mike Lewis. “This is a true value-add opportunity, which is exactly in line with our asset acquisition strategy to identify and purchase properties that offer opportunity to unlock hidden value. Having a local, joint venture partner in Moore & Associates with whom we have had prior experience further reinforces our confidence in the overall business plan.”
The Washington, D.C. office of Eastdil Secured represented the seller in the transaction. The property’s management and leasing activities will be handled by Moore & Associates.
Velocis has been active in real estate investment since 2011, purchasing 18 assets located in Texas, Colorado, Georgia, Florida, Arizona, Virginia and North Carolina. Joining Lewis as principals in Fund II are Fred Hamm, Paul Smith, Jim Yoder and David Seifert.
Moore & Associates manages over 1.5 million square feet of commercial real estate in both Washington, D.C. and Austin, Texas valued in excess of $325 million.
So Begins DC’s End-Of-the-Year Sales Frenzy
Velocis, a Dallas-based private equity real estate manager and the Bethesda, MD-based Moore & Associates, purchased Shirlington Tower, in Arlington, VA, for an undisclosed price.
