DENVER-For $228 million, a partnership of Callahan Capital Partners and Morgan Stanley's Special Situations Fund III has sold a 70% equity interest in a 2.8-million-sf, five-building Downtown office portfolio here that it acquired from Equity Office in March for $770 million in cash and debt. A source with Callahan tells GlobeSt.com that the value of the portfolio remained unchanged for the syndication, which brought in two pension funds, Canada's national pension fund and “a major US pension fund” whose identity was not immediately available.

Callahan Capital Partners did not reveal the percentage of the equity interest that it sold, but did say it generated gross proceeds of $228 million that it will use to pay down the acquisition debt on the property, which was provided by Morgan Stanley. Given that CPP Investment Board, which invests Canada's national pension fund, says it paid $125 million for a 39% stake of the equity in the deal, then the total equity in the deal is approximately $321 million, or 42% of the total value of the portfolio, and the $228 million in gross proceeds represents a 70% equity stake.

The CPP Investment Board's SVP of real estate investments Graeme Eadie says the investment helps the pension fund diversify its portfolio by increasing exposure to top tier US office properties. The other investor in the portfolio is a “major US pension fund” whose identity was not revealed by the parties involved and could not otherwise be obtained prior to publishing.