Colorado Real Estate Journal - March 5, 2014
A Boulder investor recently paid $43 million for the award winning Block 32 at RiNo apartment community in the up-and coming River North district. “I was looking for something close in to downtown,” said Jeff Sanders, principal of Mountain View Capital. “I really liked that whole RiNo area,” Sanders said. “It seemed like an area that would grow over time and become even more popular as more restaurants and retailers move into the area.” He also liked the community at 3200 Brighton Blvd. It was developed by Scott McFadden and designed by JG Johnson Architects. “There was a ton of interest in it,” said David Potarf, who listed and marketed it with CBRE partner Ron Urgitus. “It is a new property near downtown in a trendy upand-coming neighborhood,” Potarf said. “And its size was palatable for a lot of people, from individual to institutional investors,” Potarf said. “We received interest from both coasts and as well as from local buyers,” he said. It had no list price, but Potarf said he expected it to sell for about $43 million. Last year, it was one of the winners of the Mayor’s Design Awards for excellence in architecture, design and place-making. This is what the judges for the Mayor’s Design Award had to say: “Block 32 at RiNo gets at the innovative, creative and industrial nature of River North with its bold color scheme and building materials. A new take on residential living in what was historically a heavy-industrial corridor, Scott McFadden’s funky apartment building introduces a new building type, with massing that reinforces the scale of Brighton Boulevard. With a restaurant at the sidewalk to activate the street, Block 32 takes its rightful place along the gateway to downtown.” Sanders said he found a lot to like about Block 32. “I like the floor plans,” Sanders said. “I like the clubhouse and the fitness center. I think it is well-designed.” Another thing he likes is that it doesn’t have a parking garage. “I like that is has a surface parking lot, which is somewhat unusual for a downtown property,” he said. “I’m not a big fan of parking structures,” Sanders said. “Maybe it is because I am from California, where parking structures are not that common.” Sanders started investing in real estate in California in 2001, after selling a business. “I also bought properties in Texas and Florida,” he said. “I sold those assets and moved to Boulder in 2008.” Block 32 marks his largest purchase to date. “I currently own 116 apartment units in 10 buildings in Boulder,” he said. “They are townhome-style units.” He also bought an office building in Highlands Ranch. Since moving to Colorado, he has been outbid on a number of properties. “It seems like REITs and institutional investors are willing to pay more for properties than I am,” he said. What gave him an edge for Block 32 was that it had a $26 million HUD loan that had to be assumed. That kind of financing is not attractive to investors who either would prefer to pay cash or would prefer marketrate financing. But as a long-term investor, it held some appeal to Sanders. “It’s a fixed-rate loan at 4.35 percent, which might be slightly more expensive than 10-year money, but it is amortized over 40 years,” Sanders said. Still, it was not an easy deal. “It was a long and painful process,” Sanders said. “It was a six-month process. There are a lot of restrictions and brain damage that come along with assuming a HUD loan.” He said his plan is to hold the property for the long term. “I’m not a condo converter, so that is not even a consideration,” Sanders said. “I’m just a long-term investor. Typically, I’ve owned properties for five to seven years. Whether Block 32 will fit this profile or I will own it for longer, I have no idea.” He said he probably overpaid for Block 32. “My personal opinion is that I probably overpaid a little bit,” Sanders said. “At least that is what my gut tells me,” he said. “I think everyone is overpaying a bit these days. That is kind of what it takes to buy an apartment complex in Denver today. In the short term I overpaid, but I believe in the long term this will be a great investment.”