MREJ March 2016 by REjournals

VOLUME 32, NUMBER 3

March 2016

Indoor waterpark? Movie-themed amusement park? Benson-Orth General Contractors helping to bring the fun to Twin Cities suburbs

By Dan Rafter, Editor

inneapolis residents looking for even more entertainment than the Twin Cities proper can provide will soon plenty of kid- and adult-friendly fun about 30 miles northwest of Minneapolis. That’s where Benson-Orth General Contractors is ready to start overseeing the construction of an indoor water park, indoor amusement park based on movies from Sony Pictures and two major hotels. Sony Consumer Products – a division of Sony Pictures -- and Black Forest LLC, a partnership between Casey Darkenwald, Robert Kelly, Kevin Hanson

and iP2 Entertainment, is developing the Mall of Entertainment project in the Minnesota community of Albertville. Construction has yet to start, but Benson-Orth president Mike Monson says that he expects his company to break ground on the development in July or August of this year and to deliver it by the time the NFL's Super Bowl comes to Minneapolis, an event scheduled for Feb. 4, 2018. Monson said that the location for the new project makes perfect sense. “It’s right between the Twin Cities and St. Cloud. And it’s adjacent to the Albertville Premium Outlets. Those folks have changed what they are looking for in their relationships to the adjoining and adjacent businesses,” Monson Benson-Orth to page 12

Minnesota’s Doran Companies: What it takes to be named Contractor of the Year By Dan Rafter, Editor Bloomington, Minnesota's Doran Construction earned a big honor earlier this year when the Minnesota Construction Association named the company as its General Contractor of the Year for 2015.

his isn't surprising: Since 2010, Doran has built more than 20 multi-family and mixed-use projects, including the recently completed Latitude 45, a

13-story, 319-unit Class-A market-rate apartment project. Doran completed this 409,000-square-foot project, developed by Alatus and located on Washington Avenue South in downtown Minneapolis, under budget and ahead of schedule. Minnesota Real Estate Journal recently spoke with Kelly Doran, founder and owner of Doran Companies; Scott Casanova, senior vice president of construction; and Calvin Hayes, project manager, about Doran's success and what it takes to be named General Contractor of the Year.

Minnesota Real Estate Journal: You just received a big honor from the Minnesota Construction Association. What steps has Doran Companies taken to be eligible for such an award? Kelly Doran: We try to take a collaborative approach to the construction process with every project we take on. We are also real estate developers, so we have an appreciation and understanding of what the owner and developer on a project are looking for. We emphasize to our team that we have to represent the best interests of the owners when we are working Doran to page 14

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Minnesota Real Estate Journal

Contents

MARCH 2016 • VOLUME 32, NUMBER 3

INDOOR WATERPARK? MOVIE-THEMED AMUSEMENT PARK? BENSON-ORTH GENERAL CONTRACTORS HELPING TO BRING THE FUN TO TWIN CITIES SUBURBS MINNESOTA’S DORAN COMPANIES: WHAT IT TAKES TO BE NAMED CONTRACTOR OF THE YEAR

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Departments PEOPLE

NEWS

Minnesota Real Estate Journal (ISSN 08932255) Copyright © 2016 by the Minnesota Real Estate Journal is published for $85 a year at 12 times per year by Jeff Johnson, 13700 83rd Way North, Suite 206, Maple Grove, MN 55369. Monthly Business and Editorial Offices: 13700 83rd Way North, Maple Grove, MN 55369 Accounting and Circulation Offices: Jeff Johnson, 13700 83rd Way North, Maple Grove, MN 55369 Call 952-885-0815 to subscribe. Application to mail at Periodicals postage at Maple Grove, MN, and additional mailing offices (if applicable). For more information call: 952885-0815. ©2016 Law Bulletin Publishing Co. No part of this publication may be reproduced without the written permission of the publisher.

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March 2016

People a division of Law Bulletin Publishing Co.

Oppidan Investment Company Hires Two Construction Managers 13700 83rd Way N, STE 206 Maple Grove, MN 55369 For information call 952-885-0815

Publisher | Managing Editor Jeff Johnson jjohnson@recg.com Associate Publisher Jay Kodytek jkodytek@recg.com Consulting Editor Dr. Tom Musil tamusil@stthomas.edu Conference Manager | Art Director | Graphic Designer | CE Specialist Alan Davis adavis@recg.com

EDITORIAL ADVISORY BOARD JOHN ALLEN Industrial Equities ROBERT ANGLESON Navigator Real Estate RICK COLLINS Ryan Cos. US Inc. JEFF EATON Cushman & Wakefield/NorthMarq MARK EVENSON ULG Equis PATRICIA GNETZ US Bank TOM GUMP TAG Consulting JON HEMPEL Hempel Properties DAVID JELLISON Liberty Property Trust CHAD JOHNSON Hellmuth & Johnson BILL WARDWELL Colliers International GEORGE KLUEMPKE Braun Intertec JEFFREY LAFAVRE CBC Griffin Companies WADE LAU Founders Properties MIKE LE JEUNE Fabcon JIM LOCKHART WIPFLI DUANE LUND Exchange Realty PATRICK MASCIA Duke Realty Corp. CLINT MILLER Cushman & Wakefield/NorthMarq DR. THOMAS MUSIL University of St. Thomas WILLIAM M. OSTLUND CBC Griffin Companies WHITNEY PEYTON CB Richard Ellis MIKE SALMEN Transwestern STEWART STENDER Stewart Capital Partners

a division of Law Bulletin Publishing Co. 13700 83rd Way N, STE 206 Maple Grove, MN 55369 For information call 952-885-0815

National property development firm Oppidan Investment Company today announces that it has hired Brian Smith and Jeffrey Reith as Construction Managers. In their roles, both Brian and Jeffrey are responsible for working closely with Oppidan’s team of property developers to manage all client construction details and personnel. This includes negotiating contracts with design engineers, architects and general contractors; managing budgets, schedules and personnel; and successfully seeing all construction projects through to completion. Brian brings 20 years of construction management experience to Oppidan. Prior to joining the firm, he served as Construction Manager with Marylandbased construction management firm EMG. His experience also includes serving as Regional Construction Manager, Midwest Region, with McDonald’s USA; Regional Director of Construction with Pei Wei Asian Diner; and Construction Project Manager with Buffalo Wild Wings. Jeffrey brings 13 years of construction management experience to his role at Oppidan. He spent all 13 years at St. Paul-based general contracting firm Division21, where he was heavily involved in project management and sales for such clients as Kmart, TMobile, RadioShack, FedEx Office, and La Quinta Hotels. Brian and Jeffrey will support Oppidan’s Shopko work and will also be involved with new clients locally, regionally and nationally.

ACKERBERG Adds Miller as Senior Sales Associate ACKERBERG announced that Cory J. Miller, CCIM, has joined the firm as a Sales Associate in the company’s Brokerage Division. In this role, Mr. Miller specializes in tenant representation for office and industrial users of the commercial real estate industry.. Mr. Miller has over 14 years of experience in commercial realtechnology industry. Prior to joining the ACKERBERG team, Cory Miller was Associate Vice President at NAI Everest where he assisted small to mid-sized compa-

nies in the leasing, purchasing or disposal of property. In advance of his career in commercial real estate, Cory spent over 20 years at the executive level in the technology industry. “We are so pleased to have Cory joining our team. He has aBrokerage at ACKERBERG. He has a great track record of skillfully assisting clients accomplish their real estate goals”, said Ron Scholder, SIOR, Director of Brokerage at ACKERBERG. Miller added, “Ackerberg offers a wide range of real estate services to help clients and I am excited to be part of the team.”

GREATER MSP CEO Michael Langley Named One of North America’s Top 50 Economic Developers Michael Langley, CEO of GREATER MSP, was named by Consultant Connect as one of North America’s Top 50 Economic Developers. Consultant Connect, a consulting agency designed to bridge the gap between economic developers and site consultants, recently announced its 2016 list of North America’s Top 50 Economic Developers. The economic development professionals selected for this list were nominated by their colleagues in both the economic development industry and the site consultant community for excellent practices, innovation and success in building the communities they serve. “GREATER MSP is very pleased to see that Michael Langley’s leadership is acknowledged by his industry partners,” said Richard Davis, Chairman of the GREATER MSP Board and Chairman and CEO, U.S. Bancorp. “He has been a driving force in economic development in our region and it is gratifying to see him, and our region, recognized.” Langley is the founding CEO of GREATER MSP (Minneapolis Saint Paul Regional Economic Development Partnership). The Partnership leads global promotion, regional strategy, and project management for economic growth and job creation in the Minneapolis Saint Paul region, with 3.5 million residents and a gross metropolitan product of over $230 billion. Each top 50 economic developer will be featured on the weekly podcast, From The Ground Up: North America’s

Top 50 Economic Developers. These industry leaders will be interviewed on the podcast to share their expertise in the field of economic development and leadership insights they’ve learned along the way. “This annual list recognizing North America’s Top 50 Economic Developers is designed to acknowledge the hard work of the top leaders in this field and elevate the conversation around economic development and job creation,” said Ron Kitchens, managing partner of Consultant Connect. “Each of the leaders represented on this year’s list are beyond deserving of this recognition for their efforts in building our communities brick by brick and job by job.” Since the formation of GREATER MSP in 2011, the Minneapolis Saint Paul region has achieved strong job growth and record low unemployment, and has been recognized widely for its diverse and resilient economy. The Atlantic recently published an article citing “The Minneapolis Miracle” and in 2015 CNBC named Minnesota the Top State for Business in its annual ranking. The GREATER MSP-led “Minnesota Medical Manufacturing Partnership” was also awarded the “Investing in Manufacturing Communities Partnership” (IMCP) designation from the U.S. Department of Commerce in July 2015. Langley brings years of experience to the role as a widely recognized economic development strategist who has also led successful regional economic development organizations in Florida and Pennsylvania. His awardwinning work as a practitioner includes his leadership as CEO of the Allegheny Conference on Community Development in Pittsburgh, Pa., often regarded as a globally-leading organizational model for regional economic development, regional advocacy, and public policy research. A graduate of the U.S. Naval Academy, Langley also earned a MS in information systems from the Naval Postgraduate School in Monterey, Ca. He served as a Navy pilot with more than 5,000 hours of flight and crew time on surveillance and intelligence missions worldwide and as a technology analyst on the staff of the Chief of Naval Operations. People to page 23

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News RJM Construction to build Ice Arena for City of Shakopee Project to include remodel of Community Center RJM Construction, a Minneapolisbased general contractor, has been selected by the City of Shakopee to oversee construction of a new two-sheet ice arena. The project is an extension to the Shakopee Community Center and will include a remodel of the existing recreational facility. A groundbreaking ceremony is planned on April 1. Representatives from the City of Shakopee, local businesses and residents will be in attendance. The project will be completed in multiple phases, beginning with construction of the ice arena. Renovations to the existing facility will include changing the current ice arena to an aquatic center, enhancing the fitness center and studios and adding an indoor play area, senior lounge and large community

Minnesota Real Estate Journal

room. 292 Design Group is the City’s architectural partner. “The focus of the project is create a community gathering place for all residents, where community members feel ownership of the facility and are proud to call it their own,” stated Jamie Polley, City of Shakopee Director of Parks & Recreation. “We are excited to bring this long-anticipated project to life." Hired as construction manager, RJM is currently assisting the City with complicated scheduling and coordination issues involved with the 13-month project. RJM is a recognized leader in delivering Construction Manager at Risk contracts in the Twin Cities, completing projects with municipalities including Eden Prairie, Maple Grove and Elk River.

TRANSWESTERN REPORT UNDERSCORES VALUE OF GENERATION X IN THE WORKPLACE Analysis Suggests Generational Commonalities May Be Just as Important as Differences

Transwestern today releases a report that explores the generational preferences of office employees and highlights the unique perspective provided by those classified as Generation X. The research and commentary, titled “The Gen X Factor: Stuck in the Middle or Best of Both Worlds?” compares the responses of 273 Transwestern team members classified as Baby Boomers (born 1946 – 1964), Gen Xers (born 1965 – 1980) and Millennials (born 1980 – 1998). In nearly all cases, the responses of Gen Xers fall somewhere between Baby Boomers and Millennials, highlighting the unique blend of views this generation possesses – a mix of seasoned experience and savvy thinking that was the fortuitous byproduct of being sandwiched between two large generations. “Although Millennials are now the largest segment of the U.S. labor force, companies that value workforce diversity benefit from a broader range of ideas and experiences,” said New Jersey Research Director Matthew Dolly. “At the same time, while it is easy to create divisions between age groups, we found

March 2016

that there are just as many commonalities as differences between these three influential generations.” Some of the survey’s findings include the following: · Flexibility is highly valued by all generations, with only 11 percent of total respondents favoring mandatory “9 to 5” hours in the workplace. Across all groups, flex hours – characterized by an alternative, yet defined schedule – is preferred over no set hours, with Generation X voicing the strongest preference for this type of flexibility. · All generations agree that there is a high correlation between work environment and productivity. When it comes to the amenities that contribute to a comfortable environment, privacy and abundant light ranked No. 1 and No. 2, respectively, for every group of respondents. · Open offices, or “hoteling,” was viewed most favorably by Millennials, while private offices received the most votes from Baby Boomers. However, in total and by generation, respondents overwhelmingly prefer a mix of private and open office space.

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· The preference for downtown living more than tripled between Baby Boomers and Millennials, at 19 percent and 64 percent, respectively. · The importance of social media to professional life is inversely related to age: only 4 percent of Baby Boomers feel that social media is very important, compared to 7 percent of Gen Xers and 20 percent of Millennials. · Of the Generation X respondents, 56 percent reported that they identify more strongly with Baby Boomers, and 44 percent reported that they identify more strongly with Millennials. This gives Gen Xers, as a whole, a broad perspective of the wants and needs of today’s workforce. “Because of their age and experience, Gen Xers are often a natural fit for leadership positions,” Dolly said. “This group is equipped to bring proven skills and thoughtful creativity that enables all generations to make valuable contributions and positions the organization to excel.”

Minnesota Real Estate Journal

Timberland Partners Announces Purchase of Autumn Park, Overland Park, KS, 232 units Overland Park, Kansas, March 18, 2016. Minneapolis based Timberland Partners is pleased to announce the acquisition of Autumn Park, a wellestablished apartment community located in Overland Park, Kansas. Founded in 1992, the company now owns and manages nearly 11,000 apartment units in its portfolio spanning 12 states. The 232-unit acquisition was funded from Timberland Partners Investment Fund V. This was the eighth property purchased through Fund V, which now holds a grand total of 1,807 units. Timberland Partners anticipates offering additional Fund investment opportunities as it continues to pursue a strategy of aggressive growth in the multi-family real estate market. Autumn Park’s highly sought after location puts residents at the doorstep of Kansas City’s highest concentration of employers and retail amenities, includ-

ing the Corporate Woods Office Park, College Boulevard office corridor, and Town Center Plaza lifestyle retail center. Timberland Partners Vice President of Investments, Matt Fransen, said “we are thrilled about the opportunity to invest in such a well-located property in the heart of Overland Park. The Kansas City rental market, particularly the Johnson County submarket, continues to benefit from steady rent growth and strong occupancies. This acquisition represents our fourth property in Johnson County, an area we’ve identified as a growth market for our expanding apartment portfolio.” Built in 1973, Autumn Park has benefitted from over $2.5 million in capital upgrades since 2012, including all new siding, new roofs, new entryway doors and windows, and updates to all interior building hallways. Going forward, the property will be re-branded as “Arcadia at Overland Park” with plans to further improve the community with updated kitchen features, renovated clubhouse, new exterior signage and landscaping improvements.

March 2016

Arcadia at Overland Park includes 14 two-story residential buildings located on nearly 18 acres of prime real estate, offering one-, two- and three-bedroom floor plans. The property is within the award winning Blue Valley School District with amenities such as a resort-style swimming pool; tennis and basketball courts; 24-hour newly upgraded fitness center; grilling stations and green spaces; pet friendly residences and access to an adjoining park with lakes and jogging/walking trails. Overland Park is the second largest city in the Kansas City metro and the state of Kansas, boasting a unique blend of urban vitality and suburban conveniences. It is highly regarded for its premier residential communities, first-class shopping, dining and entertainment, and an outstanding quality of life and is recognized as one of the nation's top 10 small cities in which to live, according to Money Magazine. The CBRE Kansas City team of Jeff Stingley and Jeff Lamott represented the seller.

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Minnesota Real Estate Journal

Dougherty Funding LLC closes $30 million loan for Holiday Inn and Holiday Inn Express Hotels MINNEAPOLIS, Minn. – March 18, 2015 - Dougherty Funding LLC has closed a $30 million acquisition loan for two hotel properties: a 310room full-service Holiday Inn and a 75-room limited service Holiday Inn Express. Both properties are located in Fargo, North Dakota, directly across 13th Avenue South from the West Acres Regional Shopping Center. Loan proceeds were used by the Borrower, 3803 Hospitality LLP, for the acquisition of the two hotel properties. The Borrower will complete approximately $6,000,000 in improvements to the Holiday Inn over the next several months. Dougherty Funding LLC serves as lead lender and servicer for the loan.

Cushman & Wakefield/NorthMarq Represents Ehinger

Schwarz 1876 in New Store Now Open in St. Paul Cushman & Wakefield/NorthMarq (www.cushwakenm.com) Senior Directors Tom Martin and Kim Meyer represented Ehinger Schwarz 1876, a maker of interchangeable mid- and upper-end jewelry, in the site selection and lease negotiations for a new store opening on Grand Avenue in St. Paul this week. Ehinger Schwarz 1876 (www.es1876stpaul.com) will celebrate its grand opening Friday, March 11. The St. Paul location, a 1,450 sq. ft. store inside the Oxford Square shopping center on Grand Avenue and Oxford Street, is only the third Ehinger Schwarz 1876 store in the United States. Martin and Meyer worked with franchisees Susan Berger and Ann Berger Fisher, sisters-in-law from Bloomington who discovered the Ehinger Schwarz 1876 brand in Memphis, Tennessee. The family-owned company, which offers customers the ability to create new jewelry combinations by

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moving stones from one product to another, is based in Germany and also has a store in Santa Fe, New Mexico. “The Ehinger Schwarz 1876 product is something not seen in this market, or in most markets in the country,” Martin said. “We’re excited to help Susan and Ann bring this unique concept to one of the metro area’s top retail markets.” Oxford Square is owned by Minneapolis-based RMF Group.

Cushman & Wakefield Represents CORE Realty Holdings Management, Inc. in Sale of Broadway Business Center Cushman & Wakefield announced today that its team of David Stokes and Boston Weir represented Newport Beach, Calif.-based CORE Realty Holdings Management, Inc. in the sale of the 154,481 sq. ft. Broadway Building Center to Eden Prairie, Minn.based Interstate Development for $7.8 million. The four flex buildings, located at 640, 650 and 700 Taft Street

March 2016

NE/2525, 2415 Kennedy Street NE in Minneapolis, were built in 1981. Located off Stinson Blvd. and Broadway in Minneapolis, Broadway Building Center is currently 90 percent occupied; current tenants include CSC ServiceWorks, Grimmspeed, Ryder Logistics, Fairview Health Services and the Star Tribune. “Our team is very pleased to have represented CORE Realty Holdings Management throughout the lease-up and sale of these well-located assets over the past two plus years," said Stokes, SIOR, Vice President. “We took on challenging market conditions to bring the 154,481 sq. ft. four-building portfolio from 57 percent occupied to over 90 percent occupied within 18 months of engagement. When our client decided it was time to sell these assets, we quickly implemented and executed a marketing strategy that procured a high-profile buyer we knew could close in a reasonable period of time.” “CORE Realty Holdings ManageNews to page 16

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Minnesota Real Estate Journal

March 2016

Benson-Orth From page 1

said. “Right now there are very few restaurants up there. There is little else to do while you are at the mall and shopping. The outlet malls are the biggest attraction now. There is also a lack of hotels in the area.” The Mall of Entertainment project will change this, Monson said, and should bring plenty of new visitors to the area. “This will be right off the freeway,” Monson said. “This project will make this area a good destination location. You will see folks coming here from Fargo and St. Cloud, in addition to people coming from the Twin Cities.” A big project The Mall of Entertainment is no small project. The $115 million project will include an indoor waterpark with interactive features a Sony Pictures Entertainment back-lot amusement park that will include rides and interactive features based on the company's movies and a 275-room Marriott Hotel and convention center. The amusement park will cover 50,000 square feet, as will the indoor water park. The land is already owned by Black Forest and has been rezoned for the entertainment use. iP2 Entertain-

ment, one of the partners involved in the development, has already debuted similar entertainment centers in Indonesia and the Philippines. The company is involved in three new entertainmentcenter developments, including the one to be built in Albertville. Monson said that Black Forest chose Benson-Orth as its general contractor on this project because of Benson-Orth’s long history of development in the Twin Cities area. The company has been in business in the Minneapolis/St. Paul area for 40 years. Benson-Orth is now interviewing subcontractors, searching for the right firms to handle this major project. “This is going to be a truly design-

build effort,” Monson said. “We are in the process of interviewing mechanical and electrical subcontractors right now to make up the balance of our designbuild team.” According to Black Forest, the new development will feature interactive movie-making and game-based adventures that include themes and characters from classic and new Sony movie franchises. The total facility, including the new Marriott hotel, will be more than 300,000 square feet sitting on 18 acres. "Our mission is to create exciting and memorable experiences for families and friends that can also be educational," Darkenwald said in a statement. "We couldn't be more happy about the oppor-

tunity for our team, and, perhaps more importantly in the broader scheme, what this can do t help the local and business community in Minnesota." Monson said that the project should provide a boost to the Albertville area. “I am certain it will drive some major development adjacent to it,” Monson said. “I’ve already talked to a company that wants to put a nice-sized bank on the site. Developers have talked about putting a large medical clinic up there. We are talking to other people about other types of uses in the area. I wouldn’t be surprised if new restaurants or a brew pub popped up there.”

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Minnesota Real Estate Journal

Doran From page 1

on a project. At the same time, we focus on working closely with our various subcontractors to make the project a successful one for everybody. It takes a real collaborative approach to do that. We emphasize that. Hopefully, it is paying dividends. Scott Casanova: We approach every job as a team project. It can’t just be the contractor, the owner or the designers making all the decisions. We have to work together to keep each other accountable. We make sure that everything that is supposed to be happening at a given time is actually happening. We approach our projects as if we are the owner’s representative at times. We want to make sure, for instance, that the architects are getting their work done on time so that we can keep everything going according to schedule on the job site. In the end, we want everyone to be appreciative that we got the job done on time. MREJ: Is this collaborative approach paying off for your company? Calvin Hayes: Doran is successful when our subcontractors are successful and when our owners are successful. That’s the approach that we take. As long as we can collaborate with the

Doran

Casanova

entire team and make that entire team successful, we think that is what makes Doran successful. Doran: We are known for wanting our subcontractors to be successful. We want them to be successful and to do well on a job. That is important for us. When we bring a subcontractor into the job, we want to be certain that the job is ready for them, that the subcontractors can do what they are supposed to do, that they can complete the task at hand. MREJ: There is plenty of construction experience among the leadership team at Doran Companies. How important is that to being successful in this industry? Casanova: We do have that experience. Kelly has a background as a developer and in running a construction company, so that helps. What makes us special, though, is that we are not just a topdown company. We are an entrepreneurbased company. We talk about issues, and we accept ideas from everyone. That, I think, plays a big part in the com-

pany’s success. Hayes: There is a real depth to the experience with this company. We have people here who have worked in all facets of the construction industry. Hayes They know how to handle every situation that might come up. Doran: We are a younger construction company relative to the other construction companies out there. The people we surround ourselves with all came to us from different companies. So I consider this an all-star team. Thanks to the talents of our people, we have been very successful. We have very high expectations for the people who are involved in this organization. We really try hard to give them the authority, responsibility and tools to be successful in what they are doing. In one old fart’s opinion, that creates a positive atmosphere that has led to our success. MREJ: You’ve taken on plenty of challenging construction jobs throughout the Minneapolis area. Doran: We’ve done tough jobs. We’ve worked in tight locations and with significant site constraints. Logistics is important. The materials have to be there on time. We have become very

March 2016

good at doing the most difficult types of jobs. Casanova: Right now we are working on the renovation of the Depot Renaissance Minneapolis Hotel. That project has included the demolition of a water park. The project also includes adding a floor to the top of the hotel. With the idea of adding a floor to the top of the building, we made the owner’s dreams come true. We added that story to the hotel while it was being occupied. It is on schedule for delivery later this summer. MREJ: How busy has Doran Companies become? Doran: During the last five years, we have completed more than half-a-billion-dollars of revenue. That equates to more than 5 million square feet of construction. And that is just in multifamily. We have almost 1,500 multifamily units in development or in the planning stages in the Twin Cities. Today, we have a total staff of about 120 people. When we first opened the doors for Doran Companies, we had 12 employees. The service that we provide has been so important to this growth. There are always surprises that come up in building and developing projects. We focus on the proper way to deal with them.

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Minnesota Real Estate Journal Companies to page 10

ment is very pleased with the result of David and Boston’s efforts at our Broadway Business Center complex over the past two years,” said Nels P. Billsten, CORE Realty Holdings Management, Inc. Vice President. “The team’s constant communication and market knowledge allowed our organization to make well-informed decisions while positioning these assets for an eventual sale. David and Boston procured offers from six different buyers, creating a competitive environment that allowed us to maximize our sale price and terms.”

ZELLER REALTY GROUP TAPS TRANSWESTERN TO LEASE ICONIC 1.06 MILLION SF FIFTH STREET TOWERS Transwestern today announces it has been retained by Zeller Realty Group Inc. to provide leasing services for the 1,063,656-square-foot Fifth Street Towers, a two-building office complex located in downtown Minneapolis. The property is currently 65 percent occupied

with an additional 47,223 square feet of leases expiring in 2016. Transwestern’s dynamic and creative marketing and repositioning tactics have proven successful as the office market continues to compete for high quality tenants looking for creative space to attract and retain top talent. Transwestern Principal Reed Christianson, Vice President Erin Wendorf and Associate Will McDonald have been tasked with creatively marketing and repositioning the building to drive leasing. “Timing for re-introducing this property to the market couldn’t be better,” said Christianson. “The Minneapolis office market is changing as properties compete for high-quality tenants seeking creative space to attract and retain top talent.” “Transwestern’s dynamic vision and creative process are unrivaled in this market,” said Zeller Realty Group Executive Vice President Jim Durda. “This type of product is exactly what the Minneapolis market needs – and Transwestern’s excellent work on Washington Square and other projects has proven

they can execute.” Transwestern most recently partnered with Shorenstein to reposition Washington Square. In the past 12 months, the team has signed 194,094 square feet in new leases and is negotiating an additional 65,000 square feet of new leases with 540,000 square feet of prospective deals.

Frauenshuh Commercial Real Estate Group Acquires Lawson Commons Frauenshuh Commercial Real Estate Group (Frauenshuh) today announced the completed re-acquisition of Lawson Commons in downtown St. Paul, Minnesota. Lawson Commons is a 13-story, 436,000 square-foot Class A, premier office tower in the heart of St. Paul’s Central Business District. The property is 98 percent leased. An investment group, led by Frauenshuh, acquired the property from Dallas-based TIER REIT, Inc. on March 1, 2016. Frauenshuh originally owned and developed Lawson Commons, opening its doors in 2000. Since then Frauenshuh

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has provided property management and leasing services. In 2005 Frauenshuh sold the property to TIER REIT, a real estate investment trust, which was formerly known as Behringer Harvard. St. Paul continues to see improved market demand and growth as a popular business location. Additionally the state capital is adding residences and restaurants as well as a professional soccer stadium. “Frauenshuh invested in downtown St. Paul for many years and we’re excited to be back,” said David Frauenshuh, CEO and founder of Frauenshuh. “This acquisition demonstrates our confidence in the city and the great businesses that make Lawson Commons their home. I’d like to thank everyone at Frauenshuh, and our partners who helped with this transaction.”

Dougherty Mortgage LLC closes $18 million HUD 221(d)(4) loan for The Portofino at Champions Gate Comapnies to page 12

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Dougherty Mortgage LLC, a full service national mortgage banking firm, recently closed a $18 million HUD 221(d)(4) loan for the construction of The Portofino at Champions Gate, a 120-unit market rate multifamily property to be constructed in the Champions Gate area of Davenport, Florida. The project will include a mix of one-bedroom, two-bedroom, and three-bedroom units that include attached garages. Additionally, the project will feature a clubhouse with fitness center, pool area with hot tub, business center, volleyball court, and car wash. Sources of funds include the HUD-insured first mortgage and Borrower cash. The financing was arranged for borrower Portofino at Champions Gate LLC through Dougherty’s Minneapolis office. Dougherty Mortgage LLC is a full service mortgage banking firm, an approved FHA MAP and LEAN lender, as well as a Fannie Mae Delegated Underwriting and Servicing (DUS®) lender, offering a variety of loan products for the acquisition, refinance, construction or rehabilitation of various

Minnesota Real Estate Journal

property types. In addition, Dougherty Mortgage LLC provides loan servicing on their mortgages and is an approved Ginnie Mae seller/servicer, currently servicing in excess of $3.5 billion of loans. Based in Minneapolis, Dougherty Mortgage also has offices in Colorado, Illinois, Tennessee, Texas and Virginia.

CBRE ARRANGES NEW FREDDIE MAC SMALL BALANCE LOAN FINANCING FOR THE LASALLE APARTMENTS IN DOWNTOWN MINNEAPOLIS CBRE Capital Markets’ Debt & Structured Finance team has arranged new permanent financing for the recapitalization of the 26-unit LaSalle Apartments in downtown Minneapolis. Joel Torborg and Ben Bastian of CBRE’s Minneapolis office represented the borrower, 219 1524 LaSalle, LLC. The borrower is owned by Maven Real Estate Partners, who has active projects in Minneapolis and Chicago. Maven Real Estate Partners pur-

chased the property in July 2014 for $2,002,000 and have since completed major in-unit upgrades. Upgrades include completely new kitchens, including cabinets, counter tops and appliances; renovated bathrooms and fixtures; refinished floors and walls; and new lighting. The upgrades provide renters with the opportunity to live in a property with classic characteristics and charm, while enjoying the benefits of fresh space and fixtures. CBRE Press Release “The borrower’s goal was to pay off the acquisition bridge financing and return a portion of their equity invested in the property, while locking into today’s low long-term interest rates on a non-recourse basis. The Freddie Mac SBL program was a perfect fit,” Torborg said. CBRE Capital Markets successfully secured a mortgage of 73 percent loan to value for the refinancing through its Freddie Mac Seller/Servicer program. The financing was obtained through Freddie Mac’s Small Loan Balance loan program and offers several attractive

March 2016

features: a low 10-year fixed interest rate of 4.15%, 30-year amortization after 36 months interest only, 1.20x debt service coverage ratio, non-recourse, low closing costs, and is fully assumable. The 26-unit building is located at 1524 LaSalle Avenue South in downtown Minneapolis in the Loring Park neighborhood. The three-story building was built in 1919, fully renovated in 2015 and is 96.2 percent occupied. The property has historically recorded high occupancy. Freddie Mac’s Small Balance Loan (SBL) program was established to specifically cater to loan sizes of $1 million to $5 million for properties with at least five apartment units. The Freddie Mac SBL Program offers a more borrower-friendly “bank-like” approach to underwriting and quoting deals. The process is considerably shorter than borrowers’ experience with the traditional Freddie Mac program. CBRE is one of ten nationally-approved Freddie Mac seller/servicer lenders and the only company with a local Minneapolis office.

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The firm is also the largest Freddie Mac seller/servicer since 2009 with total volume of more than $8 billion in 2015. The Minneapolis-based team of Doug Seylar, Murray Kornberg, Joel Torborg, Ben Bastian, Jessica Lytle and Mark Roos focuses on loan origination and equity placement of all asset types. The Debt & Structured Finance (DSF) team also helps provide investment and advisory services to meet the financing needs of real estate owners ranging from private investors to large public entities.

JOINT VENTURE BETWEEN NY AND CHICAGO FIRMS ACQUIRES TWO MINNEAPOLIS AREA APARTMENT COMMUNITIES CBRE announced today that it has sold two apartment communities to a joint venture between Investcorp and Chicago-based Redwood Capital Group. Keith Collins, Abe Appert, and Laura Hanneman of CBRE’s Minneapolis office represented the sellers in the two deals that closed February 19. The two properties acquired are Hampshire Hill in West Bloomington and Southwind Village in Burnsville. Hampshire Hill’s seller was a private

Minnesota Real Estate Journal

investor. The property has 534 apartments in seven buildings, plus a clubhouse. Amenities include an outdoor swimming pool, community room with floor to ceiling fireplace, fitness center, recreation room, business center, grilling and picnic area, dog park and heated underground parking. Southwind Village has 320 apartments in five buildings, plus a clubhouse. Amenities available to residents include heated underground parking, two outdoor swimming pools, clubhouse with state of the art fitness center and community room, and picnic/grill areas. Additionally, each apartment has its own private entrance, central HVAC, and a full-size washer and dryer. The previous owner, San Francisco-based Virtu Investments had renovated over 90 percent of the units with stainless steel appliances, new kitchen and bathroom cabinets, granite-like countertops, and wood-style flooring.

Dougherty Mortgage LLC closes $11.3 million Fannie Mae loan for The Cedars MINNEAPOLIS, Minn. – March 3, 2016 - Dougherty Mortgage LLC, a full service national mortgage banking firm,

recently closed an $11.3 million Fannie Mae loan for the refinance of The Cedars, a 124-unit market rate multifamily apartment property located in Fargo, North Dakota. Apartment homes include central air conditioning, balcony or patio, dishwasher, hardwood flooring and washer and dryer. The property features a fitness room, controlled access, elevator and a double stall garage with opener is offered with every apartment. The Fannie Mae 10-year term, 30-year amortization loan was arranged for borrower Cedars at Brandt Crossing, LLC through Dougherty’s Minneapolis office.

MARCUS & MILLICHAP ARRANGES THE SALE OF A 68-ROOM HOSPITALITY PROPERTY Marcus & Millichap (NYSE: MMI), a leading commercial real estate investment services firm with offices throughout the United States and Canada, today announced the sale of Holiday Inn Express & Suites Hudson, a 68-room hospitality property located in Hudson, Wisconsin, according to Craig Patterson, Regional Manager of the firm’s Minneapolis office. The asset sold for

March 2016

$4,500,000. Jon Ruzicka, an investment specialist in Marcus & Millichap’s Minneapolis office, had the exclusive listing to market the property on behalf of the seller, a partnership. Mr. Ruzicka also secured the buyer, a private investor. Matthew Fitzgerald, Broker and Regional Manager of Marcus & Millichap’s Milwaukee office, assisted in closing this transaction. Speaking with Mr. Ruzicka, “This offering provided the rare opportunity to acquire a well-positioned hospitality asset within the Minneapolis MSA. Through our knowledge and experience in the regional hotel community, we were able to secure five offers within the first two weeks of marketing. Given the highly sought after nature of the Minneapolis area hospitality sector, particularly within the upper midscale segment, national interest via Marcus & Millichap’s National Hospitality group was also evident, with buyer interest generated around the country. This substantial interest provided ownership the opportunity to choose a buyer from a wide array of the most qualified buyers in the marketplace. The Holiday Inn & Suites Hudson is the leading property in its respective market, and up until its

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sale, was owned by the original developer for 20 years. This pride of ownership was apparent throughout every corner of the property and was one of the main drivers of the substantial buyer interest in this property.” Holiday Inn Express & Suites Hudson is located at 1200 Gateway Boulevard in Hudson, Wisconsin.

Dougherty Mortgage LLC closes $35 million Fannie Mae loan for multi-site credit facility Dougherty Mortgage LLC, a full service national mortgage banking firm, recently closed a $35.3 million Fannie Mae loan for the refinance of five properties, including: 88- unit Oak Glen Apartments in Orlando, Florida; 178unit River Trace Apartments in Bradenton, Florida; 212-unit Canterbury Ridge Apartments in Canton, Georgia; 145unit Lancaster Ridge Apartments in Canton, Georgia; and 76-unit Sea Mist Townhomes in Rockport, Texas. The 10-year term, 30-year amortization Fannie Mae loan was arranged for a single

Minnesota Real Estate Journal

sponsor by Dougherty’s Minneapolis, Minnesota office and included a $25,306,800 Fixed Rate Note and $10,000,000 Variable Rate Note. Dougherty Mortgage LLC is a full service mortgage banking firm, an approved FHA MAP and LEAN lender, as well as a Fannie Mae Delegated Underwriting and Servicing (DUS®) lender, offering a variety of loan products for the acquisition, refinance, construction or rehabilitation of various property types. In addition, Dougherty Mortgage LLC provides loan servicing on their mortgages and is an approved Ginnie Mae seller/servicer, currently servicing in excess of $3.5 billion of loans. Based in Minneapolis, Dougherty Mortgage also has offices in Colorado, Illinois, Tennessee, Texas and Virginia.

MARCUS & MILLICHAP ARRANGES THE SALE OF CULVER’S IN TUCSON - A 4,052-SQUARE FOOT NETLEASED PROPERTY Marcus & Millichap (NYSE: MMI),

a leading commercial real estate investment services firm with offices throughout the United States and Canada, today announced the sale of Culver's 1st Avenue, a 4,052-square foot net-leased property located in Tucson, Arizona, according to Craig Patterson, Regional Manager of the firm’s Minneapolis office. The asset sold for $2,345,000. Brian Klancke, Sean Doyle, Cory Villaume, Adam "AJ" Prins and Matthew Hazelton, investment specialists in Marcus & Millichap’s Minneapolis office, had the exclusive listing to market the property on behalf of the seller, a limited liability company. Donald Morrow, Regional Manager with Marcus & Millichap’s Phoenix office, assisted in closing this transaction. Speaking with Mr. Klancke, “The subject property was constructed in 2013 and was sold as a Sale-Leaseback with a 15-Year Absolute Net Lease. This transaction speaks to the continued vitality of the net-lease marketplace fueled by capital migrating from costal markets seeking a better yield.” Culver's 1st Avenue is located at 4810 North 1st

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Avenue in Tucson, Arizona

ICM REALTY GROUP ACQUIRES Mill Place Properties ICM Realty Group, the international real estate investment and management firm, announced today that it has purchased the 90,000 square foot, Mill Place office and retail buildings, located at 111 3rd Avenue South, 201 3rd Avenue South and 333 S. 1st Street in Minneapolis, MN. The purchase represents ICM’s second investment in Minneapolis and was made on behalf of ICM’s (VII) U.S. Core Plus Realty Trust, a fully discretionary private equity fund focused on acquiring and developing office, retail and medical office properties. Located in Downtown East, Mill Place maintains a prestigious river front address with immediate proximity to housing, hotels, shopping, dining and entertainment. Situated at the 3rd avenue bridge entrance, the property enjoys prominent visibility, provides convenient access to all major highways

March 2016

Minnesota Real Estate Journal

and is walking distance from the downtown core. In addition to its hallmark 4story atrium, a rooftop deck, covered reserved parking and tranquil setting (complete with waterfront walking trails) the building overlooks both the Mississippi River and Downtown Minneapolis, providing its occupants with stunning views. “This acquisition helps to further grow ICM’s exposure to Min-

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Langley’s community service includes leadership on the Board of the Minnesota Orchestra, the Metropolitan State University Foundation Board of Trustees, the Super Bowl LII Host Committee Executive Board, the NAIOP Board of Directors, and the Board of the International Economic Development Council (IEDC).

Anderson Companies Announces New Future for Leadership Industry veterans Anderson and Carlson to continue working relationship in different ventures

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neapolis, expanding its portfolio in a market upon which we will be placing considerable emphasis in 2016,” said Bruce Timm, ICM’s CEO. “The quality of the building, its excellent location and diverse tenant profile make this asset a compelling addition to our fund.” As part of the investment’s business plan, ICM intends to complete a building-wide renovation project, which will

restore the property to its original “brick and timber” roots, while adding significant modernday amenities. “Mill Place was an extremely appealing investment to us due to its quality and superb location within the market,” said ICM Managing Director Andrew Webb. ”One of ICM’s trademarks is our ability to provide tenants with immediate, positive changes resulting from our

signature hands-on approach. We are excited to have found an asset that will allow us to create value through a building-wide renovation project.” In order to deliver the best service possible, ICM has partnered with Ryan Companies for the property management.

ST. LOUIS PARK, MINNESOTA (March 9, 2016) Anderson Companies has steady growth under the leadership of Greg Anderson and Kent Carlson. The company has been a team member on many award-winning projects and was recognized by Twin Cities Business as a Small Business Success Story in 2014. Today they announce that their leaders will be taking a different direction. Kent Carlson will be pursing independent development projects exclusively under a new company named Inland Development Partners. Anderson Companies, which was founded in 1999, will remain under the sole ownership of President/CEO Greg Anderson. “We’ve had great success as part-

ners,” said Anderson. “Kent has made an invaluable contribution to both the business and our culture. He will be missed in our day-to-day operations, yet we look forward to assisting him as one of our clients in the future.” Anderson Companies will continue to provide construction and development services as they assist clients with their real estate efforts, however, the company will no longer purse land control on development projects as the primary owner/developer. They do welcome development collaboration opportunities with the owner/developer clients they serve. “Our focus will be on facilitating the initial stages of the real estate process — entitlements, city approvals, financial packaging, site sections — as we assist our non-industry related clients as well as our experienced owner/developer clients in moving their projects forward,” said Anderson. “We will also continue to provide early pricing and project feasibility studies with our design-build delivery model.” Carlson joined Anderson Companies in 2011 and in addition to pursing development projects, also led the company’s strategic planning and business development/marketing efforts. Hy-Vee in New Hope, Interstate Business Center II and III in Brooklyn Park and the recently completed Hamline Station

project in St. Paul are just a few of the projects Kent helped to successfully realize in his tenure at Anderson Companies. “Hamline Station is the perfect example of how we will continue to work with Kent and clients like him to bring projects to fruition,” said Anderson. “Kent worked closely with Project for Pride and Living (PPL) to create the scope and financial program of this large-scale mixed-use/affordable housing project. Our construction team was able to provide PPL with early pricing and collaborated with ESG Architects to establish a design that would meet the needs of the project’s operation and financial partners. It was a great team effort -- one we hope to repeat with Kent as our client.” Carlson is launching Inland Development Partners with Tom Shaver. Both partners are very well known in the marketplace as prior to Anderson Cos, Carlson worked for Ryan Companies US, Inc., and Shaver was formerly the president of The Opus Group’s healthcare division. The company will focus on real estate development, redevelopment and the repositioning of properties.