The University of Iowa is seeking approval from the Iowa Board of Regents to purchase the entirety of the Old Capitol Town Center for $20.6 million.
The University of Iowa currently holds a 55% stake in the building, using its share to accommodate key administrative offices, including UI Office of Student Financial Aid, Campus Safety, and Office of the Registrar. Branded as the “University Capitol Centre,” the university’s departments primarily occupy the building’s second floor.
“As we continue to return spaces in the heart of our campus to classroom and learning use and as we continue to adjust space needs in the wake of the COVID-19 pandemic as some employees continue to utilize remote and hybrid work options, full ownership of UCC makes strategic sense for the university,” said Rod Lehnertz, senior vice president for finance and operations, in a statement on the university’s website. “The building spans almost two city blocks and is centrally located. We will continue to find ways to strengthen its success as a hub for student and employee services.”
As part of the 10-Year University of Iowa Facilities Master Plan introduced to the board in January 2022, UI holds an option agreement to acquire the remaining 45% interest, the board’s agenda stated.
The original agreement requires the university to notify the building’s co-owners of its intent to exercise the purchase option by Oct. 1, 2024, with an initial closing deadline of Oct. 1, 2025. Having now entered a formal purchasing agreement, the final closing on the deal will occur on Oct. 1, 2027, transferring existing commercial leases for mall tenants to the UI.
“The building has a strong retail presence of shops and restaurants that serve our campus. Our long-term plan is to retain retail space in the building,” said Mr. Lehnertz, all of which will help offset the operational costs of maintaining the facility, according to the board’s agenda.
The main floor of the 375,000 square-foot building houses Hills Bank & Trust, Blick Art Supplies, Iowa City Transit, Buffalo Wild Wings and the more recent Raising Cane’s.
Highlights of the proposed purchase agreement include:
- A purchase price of $20.6 million, based on a recently commissioned appraisal.
- Upon board approval, the university will pay 10% of the purchase price, with the remaining 90% due at closing on Oct. 1, 2027, when ownership transfers. “No price escalation would occur during this three-year period,” the university stated.
- The seller will retain the right to accelerate closing with a minimum of six months’ advance notice.
- All existing commercial leases will transfer to the university at the time of ownership transfer, with prorated rents up to the sale date.
- Any new leases or changes to existing leases extending beyond the date of the ownership transfer must receive university approval.
“Acquiring the remaining 45 percent of the building is an important strategic purchase,” the university stated in the board’s agenda. “As the university secures ownership of the balance of the building, it would continue to develop spaces to serve student and operational needs that benefit from immediate adjacency to the UI campus core.”
The proposal goes before the Board of Regents Nov. 6.
