Colorado Real Estate Journal - December 17, 2014
The ARA team in Denver recently sold two Denver-area apartment communities that reflect two distinct aspects of the market. Combined, the two communities sold for $124.55 million. One community was new and the other was 1990s vintage. What they have in common is that they are both suburban communities and they both generated a lot of interest from prospective buyers. Of the two, the Vue at Ridgegate was the smallest and was the most expensive. The ARA team of Jeff Hawks, Doug Andrews, Terrance Hunt and Shane Ozment sold it to AMLI Residential of Chicago for $67.8 million. That equates to $241,281 per unit. The seller was Martin Fein Interests of Houston, which developed the community at 10020 Trainstation Circle in the Ridgegate community in Lone Tree. “It was a new build, just delivered in late 2013,” Hunt said. “There was a great deal of interest in it from institutional buyers that want a newer property,” Hunt said. “I think we ended up getting 15 or 16 offers,” he said. AMLI, which has a big presence in the Denver area and is developing new communities, as well as buying selected ones such as the Vue, was drawn to it because of its location and quality of construction, Hunt said. “You tend to see more interest from buyers for the urban properties than the suburban properties, but institutional buyers really liked that the Vue was so close to Meridian and the Denver Tech Center employment centers,” he said. Also, the community is close to a light-rail line, which is another selling point, he said. “It’s a stop away,” Hunt said. “Eventually, people will be able to take light rail to the airport, as well as downtown,” he said. Also, for Vue residents who work in the tech center, the proximity to the T-REX line allows them to go without a car or leave it at home when the weather is bad, he said. In one respect, the sales price is close to today’s replacement cost. “AMLI paid $241,000 per square foot, which is close or at the replacement cost, but costs keep going up, especially for labor,” Hunt said. “The reality is that a developer buys the ground, pays for all of the entitlements and design; every development going forward will cost more,” Hunt said. In the other deal, ARA sold the 312-unit Villas at Homestead at 6875 S. Homestead Parkway in Centennial for $56.75 million. The buyer was Kennedy Wilson of Beverly Hills and the seller was DiNapoli Capital Partners of San Jose. Records show that DiNapoli paid about $45.1 million in 2011. That equates to $144,526 per unit and $147.13 per sf. Kennedy Wilson paid $181,891 per unit and $185.16 per sf. There was even more interest from prospective buyers for the Villas at Homestead than for the Vue. “We got about 20 offers for it,” Hunt said. “One thing that fueled interest in it is that the units are a little larger and you have more two-bedroom units than you typically find with newer construction,” Hunt said. Of the 312 units, only 72 are onebath, one-bedroom units, according to Apartment Appraisers & Consultants’ database. That has made it more attractive to families, Hunt said. “Villas Homestead is in the Cherry Creek School District, which is like getting a private school education in a public school district,” Hunt said. It also provides a value-add opportunity, he said. Kennedy Wilson is going to “spend about $10,000 per door on renovations, which is going to push them up close to $200,000 per unit,” which is still below replacement cost, Hunt said. Carmel Cos., headed by the late Kal Zeff, who died in 2005, built the community. “Kal Zeff built a very nice product,” Hunt said.