Colorado Real Estate Journal - May 21, 2014
Griffis Residential recently paid $40.8 million for the 288-unit City Lights apartment community, which in two years will be a textbook example of a transit-oriented development. “The play on this is that it is right on a light-rail station that will open in 2016,” said Jeff Hawks, who represented the seller, Embrey Partners of San Antonio, along with fellow ARA team members Doug Andrews, Terrance Hunt and Shane Ozment. Griffis, which owns and manages more than 5,000 Class A units along the Front Range and in Nevada, beat out about 20 other parties that wanted to buy City Lights, Hawks said. The new owner is renaming it Griffis Fitzsimons South. “Every single buyer wanted it because of the coming FasTracks station,” Hawks said. It already had a lot going for it, he said. “It’s near the Fitzsimons medical center, where thousands of people work, and the new VA hospital is going to open in 2015, bringing another 2,500 jobs to the area,” Hawks said. “Plus, it is very close to the Town Center in Aurora, and a lot of restaurants and retailers,” he said. “City Lights also is a very nice community,” Hawks said. “Embrey builds a very nice property,” he said. “Actually, I think this may be the newest apartment community in Aurora,” Hawks said. However, what is really going to bring City Lights to the next level is the coming light-rail station, he said. “Once that opens, you will only be a few stops from the Denver Tech Center,” he said. The light-rail station will make City Lights attractive to young couples who work in different parts of the metro area. “Let’s say the husband works downtown and the wife works at Fitzsimons or the tech center. City Lights will be perfect for them.” And while Fitzsimons is a short drive from City Lights, many will prefer to take light rail, he said. “Parking is expensive at Fitzsimons,” Hawks said. “If you hop on light rail, you avoid the hassle and expense of parking.” Griffis paid $141,666 per unit. The property would have gone for more, but Griffis had to assume a Freddie Mac loan, which didn’t have terms as attractive as a market-rate loan, he said. Still, Griffis got a good deal. “That is far below replacement cost,” Hawks said. “It would have cost well over $200,000 per door to replace that in today’s market,” he said. David Birnbaum, CEO of Griffis Residential, couldn't agree more. “City Lights apartments presents a compelling opportunity to apply our time-tested multifamily property investment strategy,” Birnbaum said. “We see a bright future for City Lights due to its proximity to the strong labor market within the Fitzsimons medical campus and easy access to DIA and downtown Denver via the expanding public transit system adjacent to the property. Bolstered by a waiting list at City Lights for premium apartment units, we also have a ripe opportunity to implement our targeted capital improvement program, which is one of the cornerstones of our overall investment strategy.” The City Lights transaction was completed in a joint venture with PCCP LLC, an integrated real estate finance and investment management firm. PCCP provides equity and debt capital for opportunistic middle-market real estate investments throughout the United States. The acquisition of City Lights marks the fifth transaction that Griffis Residential has completed in partnership with PCCP.