Colorado Real Estate Journal - March 5, 2014
One of the biggest players in Wall Street recently paid $57.95 million for an apartment building near City Park in Denver. A special warranty deed shows that BRE Retreat at the Park Apartments LLC bought the 240-unit building at 1600 Fillmore St. from the Michelson Organization, based in St. Louis. Records filed with the Colorado Secretary of State show that BRE’s address is 345 Park Ave. in New York City, the world headquarters for private-equity giant Blackstone. The BRE document was signed by Olivia John, a principal of Blackstone’s real estate group. Michelson bought the Retreat at the Park Apartment building in 2007 for $45.6 million from its developer, Lauren Brockman, according to public records. That equated to $190,000 per unit and $212.96 per square foot. The latest sales price equates to $241,458 per unit and $270.70 per sf. It wasn’t a typical deal. Rather, it apparently was a small part of Blackstone’s $2.7 billion purchase from the financing arm of General Electric of 30,000 units in 80 different properties, primarily in Dallas, other parts of the Texas, Atlanta and the Southeast. The deal was announced last August. No broker was involved in the Retreat of the Park portion of the transaction, a direct deal between GE and Blackstone. Terrance Hunt of the Denver office of ARA was not involved in the transaction, but he is extremely familiar with the property. “Michelson did not have much ownership in the Retreat at the Park,” Hunt said. “GE basically held the equity position in the asset and in one fell swoop, Blackstone acquired all of GE’s interests in many, many properties, including this one,” Hunt said. In a deal such as this one, after the deal closes, individual values are assigned to each property “I’m sure there is some underwriting, but in deals like these they assign values to the properties based on a lot of factors, including possible tax consequences,” Hunt said. The $2.7 billion GE portfolio purchase by Blackstone was part of $13.3 billion it raised for a global real estate fund. GE, in turn, was eager to sell because it is looking to pare down its real estate exposure. GE’s commercial real estate portfolio, which it had built up two years prior to the Great Recession, was severely harmed during the downturn. “GE wanted out and Blackstone has been very bullish on real estate, even buying portfolios of single-family homes across the country,” Hunt said. He said the Retreat at the Park might have fetched a bit more if it had been sold as an individual property. “It is a fantastic location and a fantastic property,” Hunt said. “A rule of thumb is that if you go through a full marketing program of one asset, especially like this one, with such a great location, you might do a little better than just including it in a portfolio,” Hunt said. “But in this case, GE was an eager seller,” Hunt said. “They may have left a little money on the table in Denver, but they might have gotten a bit more for assets in the Midwest, where the apartment market isn’t as hot as it is here.”