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Page 6 — COLORADO REAL ESTATE JOURNAL — March 18-March 31, 2015
by John Rebchook
A Canada-based apartment
investment company recently
made its first Denver acquisition.
Brass Enterprises Inc., based in
Toronto, paid about $67.9 million
for the 328-unit Lugano Cherry
Creek apartment community at
9655 E. IliffAve.
The sellerwasDallas-basedGen-
Cap Partners. The communitywas
built in 2010.
There was a lot of interest in the
property from
prospective
buyers, said
Jordan Rob-
bins, a director
with the Den-
ver office of
HFF. He han-
dled the trans-
action with fel-
low HFF team
members Jeff
Haag and Jared Buffington.
“We ended up getting seven or
eight offers,” Robbins said.
“There were a bunch of out-of-
state institutional investors, as well
as local groups, interested in it,”
he said.
Indeed, the ultimate buyer was
not only outside of Colorado, but
outside of the U.S.
“Brass had been looking at Den-
ver from about the middle of last
year and really honed in on this
property,” Robbins said.
Brass expects an internal rate
of return of 15 percent to 20 per-
cent on its acquisitions, but often
exceeds that, according to its web-
site.
IthasinvestedheavilyinToronto,
but is aggressively looking to grow
its multifamily portfolio in Canada
and in fast-growing parts of the
U.S., such as the Sunbelt, stretching
fromFlorida to California.
“Some extend the definition of
the Sunbelt to include Denver”
and other cities, according to the
company.
In the U.S., Brass has purchased
properties in South Florida and
Austin, Texas.
Its apartment community in
Austin is minutes from Dell’s cor-
porate headquarters and close to
a new regional headquarters that
Apple is building.
Lugano is exactly the kind of
product that Brass wants to own,
Robbins said.
“They really liked the high-end
finish levels,” Robbins said.
“They also like that is has a bit of
a value-add component,” he said.
“Theywill spend somemoney fin-
ishing up some of the upgrades
that the seller started. It’s in good
shape, but they will bring it to the
next level.”
Brass also liked that the aver-
age unit size was a bit over 1,000
square feet, he said.
“That sets it apart from most
competitors in the area,” he said.
Brass also likes its southeast loca-
tion and the difficulty competitors
would have finding ground in the
area for future development, he
said.
Lugano is on the northwest cor-
ner of East Iliff Avenue and South
Emporia Street in the East Cherry
Creek submarket.
The community has two four-
story buildings that include
ground-floor retail and structured
garage parking.
Units include one-, two- and
three-bedroom options averaging
1,025 sf each.
Approximately 95 percent occu-
pied, the community offers ame-
nities such as two interior court-
yards, 1.5 acres of green space, a
club room and lounge area, resort-
style swimming pool with heated
sun deck and views of the Rocky
Mountains
Brass paid $207,000 per unit for
Lugano.
“It is a wrap construction, so
they probably paid a bit below
the replacement cost, if you were
going to build it today,” Robbins
said.
He said Lugano was Gencap’s
only asset in Denver.
“They built it,” Robbins said.
“They held it after itwas stabilized,
because when it was stabilized, it
wasn’t a good time to sell it. Obvi-
ously, nowis a great time to be put-
tingprojects on themarket, as there
is far more demand than there is
supply available.”
HFF also secured the financ-
ing for Brass.
HFF arranged a seven-year, 3.45
percent fixed-rate acquisition loan
through Freddie Mac’s CME Pro-
gram.
The securitized loan will be ser-
viced by HFF through its Fred-
die Mac Program Plus Seller/
Servicer program. HFF previously
arranged financing for the prop-
erty on behalf of Gencap in 2012.
The HFF investment sales team
representing the seller was led by
Managing Director Josh Simon
and Real Estate Analyst Matt
Gangaware.s
Lugano Cherry Creek recently sold.
Greater Denver
Jordan Robbins
uals seeking stable, income-pro-
ducing assets in prime markets
across the country. Its emphasis
is on office, industrial and multi-
family properties.
Other News
n McWhinney, Sage Hos-
pitality and Grand American
have started redevelopment of
the historic Windsor Dairy Block
in Lower Downtown Denver.
The redevelopment, called Z
Block, is located between 18th
and 19th and Blake and Wazee
streets. It will include 200,000
square feet of office space, a 172-
room Sage hotel, 30,000 sf of
restaurant and retail space and
a 400-car below-grade parking
garage, all integrated with three
historic buildings. Completion is
scheduled for September 2016.
“The rich history of the Wind-
sor Dairy Block is remark-
able and an important part of
Denver’s future,” said Chad
McWhinney, CEO of McWhin-
ney. “Our team looks forward
to the enhancement of this block
while preserving and respect-
ing its significance to our city’s
history.”s