Single-Buyer Multifamily Portfolio Sold in Colorado
- Aug 08, 2012
By Jeffrey Steele, Contributing Writer
Denver—A four-property multifamily portfolio stretching from metropolitan Denver to Colorado Springs, Colo., has been sold, with the sale brokered by the Atlanta-based full-service investment advisory brokerage firm ARA. The seller of the 1,164-unit “Colorado Value-add Portfolio” was Connecticut-based Five Mile Capital, and the buyer Archon, a Texas-headquartered investment group.
Encompassing a quartet of properties in Aurora, Castle Rock and Colorado Springs, this was the largest multifamily transaction to sell to a single investor in Colorado in six years. Archon benefited from the current interest rate environment in acquiring the portfolio, and plans substantial unit renovation.
“Denver has witnessed substantial rent increases over the last two years, and in the last year alone has seen 10 percent rent growth,” ARA principal Terrance Hunt tells MHN. “And there’s not much additional supply to be delivered in the area over the next couple of years.”
As a result, Denver multifamily properties have attracted a large number of buyers from around the country. Since the beginning of 2011, 45 percent of multifamily property buyers have been new to this market. If there are potential buyers with interest in up to 2,000 units, “a portfolio gives them opportunity to gain an instant footprint, and accumulate an efficient mass,” Hunt says.
The 482-unit Waterfield Court is one of the portfolio’s four properties. Constructed in two phases in 1988 and 1996, this Aurora, Colo. community offers easy access to job centers that include the DTC Business Corridor, Buckley Air Force Base, Fitzsimons Redevelopment and Denver International Airport. A promising value-add initiative is possible, given that almost half of the Waterfield Court apartment homes have not yet been renovated.
A second property is Rolling Hills, a 25-year-old Castle Rock, Colo. community featuring 186 one- and two-bedroom apartment homes in 12 buildings.
Situated on 18 picture-postcard-worthy acres, Rolling Hills offers residents convenient access to the DTC Business Corridor, Denver’s largest employment area.
Two Colorado Springs properties, Stone Ridge and Whispering Hills, complete the portfolio. The former is a 280-unit community on the city’s southwest side, close to Peterson Air Force Base. The latter is a 216-unit community in the northwest Colorado Springs submarket, which boasts outstanding proximity to the Garden of the Gods high-tech and industrial job corridor, and is in one of Colorado’s finest school districts. Both Stone Ridge and Whispering Hills hold the promise of significant upside through tried-and-true renovation strategies.
As might be expected with a transaction this size, unforeseen challenges arose along the way. “There were some property issues to get through, including the evacuation of one of the properties due to wildfires, just prior to closing,” Hunt says. “The property wasn’t damaged, the fire subsided, we got residents back in and closed.”
A portfolio of more than 1,100 units in three different cities along the Front Range is a rare find, says ARA vice president Kevin McKenna.
“As a consequence, the buyer pool proved very deep for this type of offering,” he adds. “There’s ample opportunity to add value to all of these assets by improving the common area amenities and continuing the renovation of the unit interiors.”