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ASB Real Estate Sells Capella Tower to Shorenstein for $255 Million

DC-Based Investment Firm Trimming Office Holdings as Part of Portfolio Rebalancing Effort
February 23, 2018
San Francisco-based Shorenstein has bought the Capella Tower, one of the most distinctive buildings in downtown Minneapolis, from ASB Real Estate Investments.

Washington D.C.-based ASB on Friday announced the deal to sell the 58-story Class A building at 225 S. Sixth St., which it has owned since 2006. The sale included an adjoining 20-story building occupied by the Star Tribune newspaper.

The two structures cover 1.4 million square feet, which works out to about $182 per square foot. Capella Tower was valued at $244.6 million for taxes payable in 2018, according to Hennepin County records.

The tower’s illuminated crown has graced the city’s skyline since construction on the building wrapped up in the early 1990s. Its namesake, Capella University, occupies about 348,000 square feet and has had naming rights to the structure since 2008.

The building is 86% occupied, according to recent CoStar data.

ASB bought the building for $245 million from then-owner Hines, based in Houston. Executives from ASB and Shorenstein were not immediately available for comment, but in the announcement, ASB said the company was motivated to sell in an effort to rebalance its portfolio. Office stock made up about 36.3% of its holdings as of Dec. 31, according to the ASB website, which also indicated that the firms is looking to cut that proportion down to 20%.

"Capella had become a less strategic investment from a portfolio diversification standpoint, and the current market dynamics presented a good opportunity to sell and redeploy capital," Larry Braithwaite, senior vice president and portfolio manager of ASB’s Allegiance Fund, said in the release.

This appears to be the third large office sale by ASB in 2018. In late January, ASB sold 900 G Street, a 112,635-square-foot office building in Washington DC's East End submarket for $144 million to an affiliate of Masaveu Real Estate US. ASB also is under contract to sell the 1.6 million-square-foot Infomart data center and office complex in Dallas to Equinix for $800 million. However, ASB also bought an office building at 64 New York Ave. NE in Washington DC in December for $186.3 million.

Shorenstein owns two other properties in Minneapolis in addition to Capella: Washington Square, a 1.1 million-square-foot office complex at 100 Washington Ave. S., and the Maverick Apts., a 168-unit luxury apartment building in the North Loop district.

Please refer to CoStar Comp # 4144482 for additional information on this transaction.

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