Midnight Sun Capital to expand its portfolio

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Springs-based Midnight Sun Capital Management CEO and Hawaiian native Louie Larimer teamed with partners at the Aleut Corp. and Chalista — both native-Alaskan-owned companies — to form a real estate investment in 2009.

In its first year, Midnight Sun Capital’s portfolio accumulated $10 million in assets. It’s now hoping to add another $15 million to $20 million in property annually over the next three years.

Acquisition categories include a mix of retail, Class A office, medical-office, industrial, and multifamily.

Larimer, who was a Colorado Springs commercial real estate attorney and corporate consultant prior to forming Midnight Sun, said the two Alaskan firms are both government contractors that were looking for a way to collaborate on commercial real estate investments.

“We’re a relatively small investor compared to large real estate investment trusts — and we’re very conservative,” he said.

Prior to initial acquisitions, Larimer studied 50 of the most successful real estate investment trusts.

His findings: The best performers were those with less than 50 percent debt in the properties they acquired. As a result the three partnering companies limit the debt they carry on an acquisition to 50 percent.

And that’s only after completely thorough due diligence.

The triad’s principals, for example, review more than 300 proposed transactions each quarter and assemble “details” on about 80 of those. The list of possible acquisitions is then narrowed to 12 or 15 properties scheduled for site visits. Letters of intent are then issued for one or two properties, Larimer said, adding that buying decisions require unanimous support.

Based on that deliberate approach, the investors so far are only choosing “core Class A income-producing properties.”

Going forward Midnight Sun may look at “value-add” or distressed opportunities, but not for another two years or so.

So far, they are evaluating properties in states like Texas, Arizona, Nevada and Colorado. Two Fort Collins-Loveland area deals have made the short list.

“We’re staying away from California — it’s not as stable,” Larimer said.

Based on their success so far, Midnight Sun’s partnering companies have also been asked to mentor other native-owned companies, or “village corporations.”

Moving carefully and slowly supports Midnight Sun’s goal to create a sustainable organization.

“We think in terms of generations because of our native-owned beneficiaries,” he said. “Ours is a unique model,” he said.

Corporate Ridge contract awarded

El Paso County’s search for a general contractor to remodel existing third floor office space in Building One at Corporate Ridge at the former Intel facility is over: G.E. Johnson Construction Co. has been selected to handle the project’s first phase.

The $559,000 contract award was approved this week by the El Paso County Board of Commissioners in a 5-0 vote.

Twelve companies responded to the county’s request for proposal issued in September. Three finalists were identified, including GE Johnson.

Work will include pre-construction and initial remodel work necessary before the Department of Human Services can move into its new headquarters after the first of the year.

The next phase will be a $2.5 million project that will isolate and redirect an existing conjoined heating, ventilation and air conditioning system for new county department tenants.

Johnson said his company hopes to provide construction management for that project as well.

“We are elated to get this job in our own community,” he said. “It means a lot to us.”

Most of Johnson’s crews are currently working on four medical or hospital construction projects outside of town in Parker, Castle Rock, Denver and Frisco.

Once fully remodeled, the Department of Human Services will vacate about 85,000 square feet of space in two county-owned buildings at 17 N. Spruce Street and 105 N. Spruce Street downtown.

A year-end move-in is planned.

Farewell, all

This is my last week at the Colorado Springs Business Journal after nine years. For anyone who’s ever worked with me, you know I’ve loved this beat. I’ll miss hearing all of your stories, and thank you for all of your help over the years.

Jonathan Easley will now cover the real estate and construction beats for the Business Journal. Look for his column next week.

And look for me around town.