Overview
Newmark, acting as exclusive advisor for the Seller, is pleased to present the opportunity to acquire the fee simple interest in WaterPark at Briarwood Buildings II & III (the Property); two exceptional assets in the Arapahoe Corridor micro-market, which is located in the heart of Denver’s vibrant Southeast Suburban submarket (SES). The two singletenant assets are leased to Bio-Techne Corporation (NASDAQ: TECH) and Quantum Corporation (NASDAQ: QMCO) with lease expirations in 2034 and 2037, providing long-term stable income.
Bio-Techne executed a 12.5-year lease for Building II lease in 2021 during peak-COVID to accommodate its acquisition of Novus Pharmaceuticals antibody and reagent operation. Bio-Techne received $2.2M in a landlord-funded tenant improvement allowance with an additional $900k tenant investment to upgrade their space with the addition of a lab area, walk-in freezers and a shipping area for the production and distribution of products for
life science research. The company’s IT command post sits at this location and is the primary gateway connecting its multi-national platform with customer service, shipping and storage completes the new fit-out.
Quantum executed a 15.5-year lease for Building III also in 2021 and completed its supply-chain delayed $13.5M tenant improvement project with more than $7.5M being invested solely by the tenant. The full building renovation includes a new lobby, a cutting-edge customer focused Executive Briefing Center, production and demo software labs, on-site data center, shipping area with new dock, open office and common areas provides mission-critical infrastructure for sales, assembly to automation engineering.
Landlord’s preference is for a single sale but will consider breaking up the portfolio.
Investment Highlights
OCCUPIED BY TWO PUBLIC COMPANIES WITH 12.3 YEARS OF REMAINING PORTFOLIO WALT
Bio-Techne Corporation (Nasdaq: TECH) has a $12.3B market
cap with thousands of products in its portfolio which generated
approximately $1.14B in sales with 3,200 employees worldwide.
Quantum Corporation (Nasdaq: QMCO) has a $33.6M market cap with $407M in sales with 850 employees.
LIFE SCIENCE TENANT – BIO-TECHNE – EXPANDS THEIR FOOTPRINT IN THE PARK
Bio-Techne, a leading developer and manufacturer of high-quality purified proteins and reagent solutions, executed a lease to relocate and expand into 73,781 SF in Building II in late 2021. The tenant’s landlord-funded improvement allowance of $2.2M combined with the tenant’s additional estimated ~$900k investment has funded its buildout which will include a new lab area, shipping area, walk-in freezers to store their products, among other upgrades – totaling an estimated ~$3.1M investment into the space.
TECHNOLOGY TENANT – QUANTUM CORPORATION – CONSOLIDATED INTO PARK WITH 13.4-YEARS OF REMAINING TERM
Quantum Corporation, a data software company, selected WaterPark to modernize their Executive Briefing Center, a conference center and technology lab with on-site data center. Quantum, whose customers include NASA and the MLB, executed a 15-year lease in 2021 to occupy all of Building III’s 74,736 SF. The
international company is nearly complete with their tenant improvement buildout to which they have streamlined labs, increased flexibility of lab and office spaces, elevated their customer experience and focused on collaborative spaces for a total investment over $13.5M. Quantum has a termination option effective February 2028 with a termination fee due March 2027 of approximately $6.7M.
FLEX ASSETS SUPPORT TENANTS’ ADVANCED TECHNICAL OPERATIONS
The Property has attracted tenants who value it’s 16’ slab-to-slab height that accommodates robust Mechanical, Electrical and Plumbing infrastructure, flexible loading, yard space and ability to. The two leases were signed negotiated during peak-COVID and represents the 2nd and 3rd largest leases signed during 2021.
BELOW-MARKET RENTS RESULTS IN AN ATTRACTIVE INVESTMENT BASIS
Bio-Techne’s $13.65/SF and Quantum’s $13.50/SF net rents are ~25% below market with attractive rental escalations of 3.0% for Bio-Techne and a 3.8% average for Quantum. Bio-Techne’s recent tenant improvements totaled $42/SF with Quantum spending more than $180/SF on its space. The landlord contribution was $30/SF and $80/SF respectively. Through the end of the contractual lease terms, the contractual net rental income totals $30.9M which will return more than 100% of the anticipated purchase price.
PREFERRED LOCATION FOR SUBURBAN FOCUSED, LARGE CORPORATE TENANTS
Attracting large corporate users has been an integral part of the success of the Southeast Suburban submarket. By offering large corporate users the opportunity to be a single tenant and customize their space to fit their needs, SES assets are very attractive to large corporate users.
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