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by Jennifer Hayes
Summit Management Ser-
vices Inc., an Akron, Ohio-
based housing management
and development firm that
owns and manages more
than 1,350 apartment units
in Colorado, paid $86 million
for the latest addition to its
portfolio.
Stonegate, a 350-unit gar-
den-style community on 24
acres at 11815 Ridge Parkway
in Broomfield, is Summit
Management Services’ first
purchase in the Broomfield/
U.S. 36 corridor, an area
where it has been pursuing
growing its holdings.
“Summit Management
owns assets in Fort Collins
and has been targeting that
Broomfield/U.S. 36 corridor
for awhile,” said Holliday
Fenoglio Fowler LP’s Jordan
Robbins. “They really like
that area.”
Robbins, along with HFF’s
Jeff Haag, represented the
out-of-state seller of the com-
munity, constructed in 2001.
“We had a ton of interest
in Stonegate,” Robbins said
of the community, which
offered a value-add play to
i nve s t o r s .
“The value-
add market
is still really
c o m p e t i -
tive. There
is a lot of
capital chas-
ing value-
add deals,
w h e t h e r
they are
2000 product like this or
even older, ‘80s and ‘90s built
product. We’re seeing still a
pretty deep buyer pool on
the value-add side.”
Summit Management
Services plans to make
improvements to the exte-
rior and common areas of
Stonegate as well as make
interior upgrades.
Stonegate, which compris-
es 18 two- and three-story
buildings offering a mix of
one-, two- and three-bed-
room apartments, features
attached anddetachedgarag-
es. Additional unit amenities
include 9-foot ceilings, air
conditioning, ceiling fans,
garden tubs, gas fireplaces,
in-home washers and dryers,
private balconies, walk-in
closets and available storage.
Community amenities
include controlled access, a
resort-style swimming pool,
hot tub, grilling area, play-
ground, dog park, 24-hour
fitness center, resident lounge
with a full kitchen and fire-
place and “sweeping” views
of the Front Range.
Additionally, Stonegate
is located less than 3 miles
west of 36, near Flatiron
Crossing’s 2 million square
feet of retail options and
just west of Interlocken
Advanced Technology Envi-
ronment, which comprises
4 million sf of office space.
There are strong demo-
graphics and jobs, which
also were a draw for the
buyer, added Robbins.
At the time of the sale,
Stonegate was 95 percent
occupied.
In addition to Summit
Management’s Colorado
holdings, the firm also owns
and operates a collection of
housing styles with more
than 3,000 apartments in
Ohio and North Carolina. ▲
Inside
The 350-unit Stonegate community in Broomfield was purchased
by Summit Management Services Inc.
APRIL 5-APRIL 18, 2017
INSIDE
M anypropertymanagement
companiesadvertise state-
ments suchas,“We treat
thepropertieswemanage
as if theywereourown.”
For this statement tobe true,proper-
tymanagersmust constantly focus
onmaintainingand increasing the
valueof the real estateasset they’re
responsible foroverseeing.Fora
propertymanager tobemost effec-
tive,and to truly treat theproperties
as if theywereherown,sheneeds
tohavea fundamentalunderstand-
ingof threekey real estate financial
concepts: cap rate, returnon cost
and leverage.
The firstandmost fundamental
concept is the capitalization rate,
commonly referred
toas cap rate.The
cap rate repre-
sents theannual
percentage return,
oryield,an inves-
torwill receive if
thepropertywere
purchasedall cash.
It isdefinedas the
ratioofnetoper-
ating income to
propertyvalue.For
example, ifProp-
ertyXwas recently
built, isproducing
a stabilizedNOIof
$500,000,andan investorpays $8.4
million topurchase it, then the cap
ratewouldbe $500,000dividedby
$8.4million,or 5.95percent.
The cap rate isa reflectionof the
risk inherent inacquiring thatpar-
ticularproperty –more riskmeansa
higher cap rate.Cap ratesvarybased
onproperty level risk factors such
as theage,occupancy, functional-
ity, location,creditworthinessof the
tenants,diversityof the rent rolland
lengthof tenant leases.
For example, ifaproperty isolder
andhasanumberofdeferred
maintenance items,an investor
will requireahigher returnonhis
investment.Assume thatProperty
Y is 20yearsold,hasanumberof
tenantswhoare struggling finan-
cially,andhasa significantamount
of tenant rollover in thenext 24
months.There ismore risk in this
investment,and therefore the cap
ratewillneed to take these factors
intoaccount. Ifan investor,after
taking into considerationall the risk
factors,decides shewill requirean 8
percentyield, thepurchaseprice can
be calculatedas theNOIof $500,000
dividedby 8percent,which is $6.25
million.
Thedifference in cap rates
between these two examples reflects
thedifferent riskpremiumsasso-
ciatedwith each investment.The
propertywith less risk sold fora 5.95
percent cap rate,and theproperty
withmore risk sold foran 8percent
PleaseseePage26
LindaKaboth
Vice president,
director of business
development,
RiseCommercial
Property Services,
Englewood
Jordan Robbins
by Jill Jamieson-Nichols
Crescent Real Estate LLC
recapitalized $140.98 million
in assets in Flatiron Busi-
ness Park in Boulder and
added to its holdings there
for $22.21 million.
The recapitalization,
which brought in partners
Goldman Sachs and Lion-
stone Investments, includ-
ed 16 office and office/flex
buildings and a develop-
ment site that Crescent has
owned since 2011.
“The performance has been
very strong, and it’s just the
right time for the investor
partnership that we had that
originally bought it to exit
the transaction,” said Conrad
Suszynski, co-chief operating
officer. “We at Crescent felt
like there’s a lot more to do, so
we obviously wanted to stay
involved in Boulder and spe-
cifically Flatiron Park.”
The same day it completed
the recapitalization, Crescent
Real Estate acquired four
additional buildings in Flat-
iron Park from a Boulder fam-
ily that developed themmany
years ago. The deal brings
its holdings in the park to
approximately 859,000 square
feet. The company also owns
just under 900,000 sf of office,
flex and industrial assets at
the Campus at Longmont in
Boulder County.
The additions to the Flatiron
Park portfolio include 2300,
2400, 2450 and 5757 Central
Ave.
The overall portfolio is
approximately 92 percent
occupied.
HFF was the broker of
record for the transaction. John
Jugl, vice chairman of New-
mark Grubb Knight Frank’s
Western Region Capital Mar-
kets, also was involved in the
deal.▲
Protecting identity
An industrial portfolio with
freestanding buildings that
give tenants their own iden-
tity sells for $26.4 million.
CONTENTS