PHOENIX-Cole Real Estate Investments has made its largest investment in Arizona, paying $170 million for Apollo Group Inc.’s University of Phoenix office complex at Riverpoint. The company negotiated a 20-year sale-leaseback with the private education provider. Cole’s lease with Apollo feature 2% annual rent bumps, according to Thomas W. Roberts, executive vice president and head of real estate investments for Cole.
Comprised of three mid-rise office towers, Apollo Group’s Riverpoint Facility totals roughly 600,000 square feet. It also includes two parking structures. The facility was constructed from 2006 to 2007 as a build-to-suit, with improvements completed in 2008.
Employees based at the Riverpoint Facility perform a number of duties, including administrative, financial, legal, marketing and information technology. Additionally, Apollo Group utilizes the property to serve its underlying subsidiaries, including University of Phoenix, its online classes and military education functions.
Apollo tapped Bank of America to market the property--a process that lasted roughly 90 days. Cole spent two months negotiating with Apollo, Roberts says. “Both Cole and Apollo are Arizona-based companies, so it’s a natural fit,” Roberts tells GlobeSt.com. “They knew who we were and after interviewing us, they thought we would be a good landlord. And we think they have excellent credit--they’re non-rated, but they have very little debt--along with high-quality real estate.”
Roberts notes that Apollo leases most of its facilities across the nation. “This is one of the company’s last owned assets and the sale-leaseback is consistent with their strategy of leasing and putting their cash to work in their operations,” he explains.
Prior to the Apollo acquisition, Cole owned 1.3 million square feet of commercial real estate in Arizona including single-tenant retail, a small office building leased to Allstate and a distribution facility leased to The Home Depot. The firm’s investment in the state totaled $177 million; the Apollo deal doubles the firm’s investment in Arizona.
Bill Broms, director of acquisitions, and Robert Micera, chief investment officer for office and industrial, represented Cole in the transaction.
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