Excelsior-based Water Street Partners has paid roughly $19 million for a mid-1980s office campus in Minnetonka, a recently renovated property that’s up for additional improvements under the new ownership.
Water Street Partners, a sister company of Oppidan, acquired the Whitewater Office Center I and II from Minnetonka Whitewater LLC, an entity related to Ryan Cos. US Inc., according to real estate documents made public this week.
A certificate of real estate value reveals that the property sold for $18.875 million with a $7.71 million down payment. Water Street announced the sale in January, but the price wasn’t disclosed.
The complex, at 12501 and 12701 Whitewater Drive, is 68% leased and has 161,000 square feet of space in all, said Jim Hegedus, Water Street managing partner. Tenants include Westwood Professional Services, Marco Technologies, and BBQ Holdings.
Hegedus said in an interview Tuesday that the property was recently renovated, and that Water Street plans to invest about $3 million in additional upgrades.
The complex already has a “pretty full amenity package,” but additional improvements could bring enhanced food offerings, such as a “grab-and-go market concept,” and revamped audio-visual facilities, he said.
“There’s really only one spot in the building that hasn’t been touched, and that’s where we’re planning to make these subsequent improvements,” Hegedus said.
Water Street said in a press release that the Whitewater property is the first investment in a “value-add” fund that “seeks to identify opportunities caused by heightened levels of uncertainty in real estate markets.”
Investment candidates for the fund are suburban office, industrial, and multifamily assets in the Twin Cities and Raleigh-Durham, North Carolina.
Hegedus said the Whitewater property’s location is very familiar to Water Street.
“We’re located just down the street in Excelsior,” he said. “We live in and around the western suburbs. And our thought is as people start coming back to the office, locations like this and projects like this are going to be the most successful.”
Joe Boone, Water Street managing partner, said in a statement that Water Street expects properties like Whitewater to “outperform the broader market.’
“We believe the attributes of Whitewater will appeal to tenants as they rethink their corporate space needs and develop long-term plans,” Boone said.
Finance & Commerce reported in January 2017 that Ryan Cos. US Inc. and Wayzata Investment Partners paid $20 million in cash for four 1980s office buildings in Minnetonka, including the Whitewater property.
Also included in the 2017 sale was the Minnetonka Corporate Campus I & II at 12800-12900 Whitewater Drive. In March 2019, the Ryan-Wayzata Investment Partners joint venture sold the Minnetonka Corporate Campus I and II properties for $19 million.
Shawn Moore, vice president of acquisitions and asset management, said in an email Tuesday Ryan acquired the Whitewater Office Center and the Minnetonka Corporate Center in 2016.
“Our goal from the beginning was to renovate the properties, sign new leases and then eventually sell the buildings. In 2018, we sold Minnetonka Corporate Center and sold the remaining two buildings from this portfolio in December,” Moore said.