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December 18, 2014

Urban Renaissance Group buys Touchstone Corp.

By NAT LEVY
Journal Staff Reporter

Urban Renaissance Group has acquired Touchstone Corp., one of the most active developers in this region.

Touchstone owners Douglas Howe, Jim O'Hanlon and Shawn Parry will step back from day-to-day operations and take on advisory roles. They will remain co-investors in individual Touchstone projects with URG.

Touchstone is now a wholly owned subsidiary of URG.

A-P Hurd, who was vice president at Touchstone, is now Touchstone's president and chief development officer. Patrick Callahan, URG's founder and a former senior vice president at Equity Office Properties, will serve as chief executive officer for both companies.

Callahan

Hurd

The rest of the Touchstone leadership team will remain with these new roles: Troy Black, chief financial officer; Kristin Jensen, vice president of development; Joe Polito, senior development manager; and Paul Klansnic, senior project manager.

Hurd said not a lot will change at Touchstone. It will continue to be a “scrappy, creative, urban developer that finds great sites and complex projects and does the work to figure them out and untangle the ball of string and make the project work,” she said.

The genesis of the deal goes back several years. Howe, O'Hanlon and Parry, who are all now in their 60s, built a new management team in 2007 with the goal of having them take over eventually.

About three years ago, Touchstone's owners reached out to Heartland LLC to help find a partner that had good relationships with institutional investors. Because of more restrictive lending policies since the recession and investor requirements that developers have more skin in the game, the owners decided the right partner would help Touchstone continue to thrive.

Touchstone and URG reached an agreement in September 2013 and the deal closed last week. Financial terms were not disclosed.

“It all came together in all of the right ways in the right moment,” Howe said.

As part of the deal, URG will invest in several Touchstone projects:

• Hill7: an 11-story, 300,000-square-foot office tower and a 14-story, 222-room Hilton Garden Inn at 1821 Boren Ave. Construction began in summer 2013, and completion is expected in March. An affiliate of Principal Real Estate Investors is the primary investor in the office portion.

• NorthEdge: a four-story, 210,000-square-foot office project under construction near Gas Works Park. It is scheduled to open in March 2016.

• Tilt 49: an 11-story office building and 36-story residential tower at 1812 Boren Ave., across the street from Hill7. Construction is expected to begin in the second quarter of next year.

• The Troy Block: a two-building, 817,000-square-foot office project that is under construction on the site bounded by Boren, Fairview, Harrison and Thomas. An affiliate of USAA Real Estate Co. is the primary investor.

• A 156-room Everett Marriott Courtyard Hotel in Everett that has been under construction since October, and is expected to open in spring 2016. AIG, which has a relationship with URG, is now the primary investor in NorthEdge and the hotel portion of Hill7. AIG also invested in the office portion of Hill7.

AIG is involved with several housing projects in the area, but Callahan said these are AIG's first hotel and office investments here.

Urban Renaissance Group was founded in 2006 and manages more than six million square feet of office and retail properties. After working on several projects with URG, Joshua Green Corp. acquired a substantial stake in the company in 2012.

This deal with Touchstone gives URG the complete package, Callahan said. Now it can do anything from ground-up development to property management to redevelopment of existing buildings.

Buildings are being sold for very high prices right now, Hurd said, and that's good for new development. When sale prices are lower, new development doesn't make as much sense, so that's a good time to find buildings to redevelop. Hurd said that's something URG is very good at.

Hurd said Touchstone will combine its experience on new projects with URG's ability to manage property and redevelop buildings so together they can be successful in all phases of the development cycle.




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