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Developer Shea buys Tech Center

Estimated $150 million deal also includes Meridian park

John Rebchook, Rocky Mountain News

Published February 1, 2006 at midnight

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In a blockbuster deal, the owner of Highlands Ranch on Tuesday paid an estimated $150 million for the Denver Technological Center's assets.

Shea Homes and Shea Properties in one fell swoop acquired 1,300 acres of developable land in the Tech Center and the Meridian International Business Park.

The deal includes: the 800-acre Meridian Village in Douglas County, which eventually could have 2,500 residents and which is owned in a partnership with the Bradbury family; eight office buildings, including the Hudson Bay Centre in downtown Denver and Ptarmigan Place in Cherry Creek; and the Marina Square Shopping Center in the Tech Center.

Peter Culshaw, president of the Tech Center, will head Shea Properties in Colorado, the company's commercial division. Chetter Latcham will remain as president of Shea Homes. Previously, he also ran the commercial side and will continue to be involved with that aspect of the business.

"DTC and Meridian business parks are crown jewels of the Denver metro area, and the acquisition makes strategic sense of our company's long-term growth in Colorado," Latcham said in a statement.

With this deal, Shea, which also owns the 3,000-acre Reunion community in Commerce City, has more than 5,000 acres that can be developed in the metro area.

The purchase comes as the Tech Center's parent, London-based Peninsular & Oriental Steam Navigation, is close to being sold.

Uncertainty about the fate of the Tech Center and its other holdings after the P&O sale made him want to sell the assets, Culshaw said.

Latcham said Shea paid "in the nine figures" for the Tech Center's assets, or at least $100 million, although he didn't reveal the exact price. Experts estimated the value of the deal at about $150 million.

In 1997, J.F. Shea paid $473 million to the Philip Morris Co. for its Mission Viejo subsidiary, which included the 22,000-acre Highlands Ranch and the Mission Viejo and Aliso Viejo master-planned communities in California. Highlands Ranch accounted for at least two-thirds of that deal, because the two California communities were mostly completed, Latcham said.

The Tech Center deal came together quickly. Shea signed a letter of intent atop Vail Mountain on New Year's Eve.

"This might be a record for the closing of a deal this size," Culshaw said. "This was really done at breakneck speed."

Latcham said his team ran some "quick spreadsheet numbers" that estimated if they sold a third of the land, the remaining could house $2 billion in developments in today's dollars.

"Realistically, we have enough product that we could continue to build forever," Culshaw said.

The Tech Center has 900 acres, almost 11 million square feet of office and commercial development and almost 3,500 residential units.

Meridian has almost 1,600 acres with about 4 million square feet of office and commercial development and almost 2,000 residential units.

Technically, Meridian has room for another 15 million square feet, although it's unlikely that it ever will be built out to its maximum density.

J.F. Shea at a glance

• Founded in 1881 as a plumbing fixtures company, ithelped build the Hoover Dam and the Golden Gate Bridge in the 1930s. It is the parent company of Shea Homes and Shea Properties.

• In 2004, the privately held company sold $2.8 billionworth of homes. It owns 5,000 apartments and 2 million square feet of commercial space in Colorado and California worth about $1.6 billion.

• In 1997, it paid $473 million for Highlands Ranch and two master-planned communities in California. It also is developing the almost 3,000-acre Reunion community in Commerce City.

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