Colorado Real Estate Journal -

C&W team sells Sommerset Gardens

by John Rebchook

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Kennedy Wilson of Beverly Hills, Calif., has entered the Denver-area apartment market by paying almost $40 million for the 420-unit Sommerset Gardens apartment community in Aurora.

The seller of the community at 14304 E. Tennessee Ave. was the Bascom Group, based in Irvine, Calif.

Bascom remains one of the largest owners of apartment communities in the Denver area.

The sellers were represented in the transaction by the Cushman & Wakefield team of Pat Stucker, Jeff Haag and Ray White.

“It was the maturation of the partnership and so it was time to bring it to market,” Stucker said.

“Bascom bought it when they entered the Denver market back in 2005.” Stucker said the property drew a lot of attention from prospective buyers.

“There was a lot of interest in it,” he said. “It was very competitive. We had 17 bids.” Kennedy Wilson paid $39.75 million for Sommerset Gardens, $94,693 per unit or $111.29 per square foot.

Records show that Bascom had paid $24.3 million for Sommerset, which equates to $57,875 per unit and $68.15 per sf.

However, Kennedy Wilson purchased it well below its replacement value, White said.

“The numbers we are seeing in the market now are about $160,000 per unit,” White said.

“And for a three-story, garden unit like this, it could easily be $170,000 to $175,000 a unit,” he said.

Although the property was built in 1982, it had a lot going for it, White said.

“Kennedy Wilson liked the Aurora story,” White said.

“For one thing, it is going to be very close to the new light-rail station that opens in 2016,” he said.“It will be maybe eight to 12 blocks from the station.” Stucker said Aurora’s cachet is growing.

“Really, Aurora is kind of a sleeping giant,” Stucker said.

“In the past, buyers had kind of shied away from Aurora,” Stucker said. “It is kind of amazing how much interest there is now in Aurora. They like what is happening at the Anschutz Medical Campus at Fitzsimons and all the biotech industry taking root there.” He said Sommerset Gardens has not drawn a lot of renters who work at the medical campus, even though it is only about a five-minute drive from it.

“I think that is one of the areas that the new buyer is going to build on,” Stucker said.

Not that Sommerset Gardens has had trouble finding residents.

“It was over 95 percent occupied when it sold,” White said.

“It has maintained pretty high occupancy levels, even during the downturn.”

Other News

A limited liability company, 1620 Grant Street, headed by Mark Nealon, paid $9.31 million for the 117-unit, 13-story former Eden Manor at 405 W. 32nd Ave., in West Highland in Denver.

The seller was Eden Manor Management Corp., which has operated as affordable housing for the Beth Eden Baptist Church for more than 50 years.

Nealon, who has renamed it Julian32 at Highland Square, will accommodate the current residents and will convert units into market-area apartments as they become available.

Cornerstone Apartment Services is managing the building.

Only a handful of units are currently available. Most of them rent from $1,000 to $1,200 a month, Nealon said.

CAH Investments of Denver paid $7.58 million to Cerulean Properties of West Liberty, Iowa, for the 100-unit Willowick apartment community at 10603 E. Jewell Ave. in Aurora. The brokers on the deal were Steve Rahe and Tom Wanberg of Transwestern.

Draper Property Management LLC paid the asking price of $5 million to CSM Laredo Partnership LLP for the 100-unit apartment building at 16130 E.

17th Place in Aurora.

Adam Riddle of the Unique Apartment Group was the listing broker and Kevin Higgins, also of the Unique Apartment Group, was the selling broker.

The Calame Lewallen team at Pinnacle Real Estate Advisors LLC represented both the buyer and seller in the $1.73 million sale of a 12-unit apartment building at 701 28th St. in Denver.

Both the buyer and seller were limited liability companies. The buyer was Stickel Investments and the seller was 1240 Cedar. The 10,581-sf building was built in 1960 and in 2007 was extensively renovated.

The building is near the lightrail station at Welton Street.

In recent years, the property had been sold as individual condominiums, but the seller completed work necessary to reposition the property as a multifamily rental asset.

The move allowed the buyer to capitalize on the exceptionally strong lending options available right now for multifamily in and around Denver, according to the Calame Lewallen team.

Kyle Malnati and Greg Johnson, principals of Madison Commercial Properties, represented the buyer who paid $1.71 million for the 17-unit Greentree Apartments at 1235 Clayton St. in Denver’s Congress Park neighborhood.

“The owner preferred an off market sale and we were able to match them with the perfect buyer for their building,” Johnson said. The sale was part of a 1031 exchange for their client.

“There were multiple offers on the table, but we presented the best solution,” he added.

Malnati said the property benefitted from “abundant off street parking, which is unique in this neighborhood.” He said the property benefits because it is within walking distance to nearby restaurants such as Shells & Sauce and Chef Zorba’s, as well as Dazbog coffee.

Joe Hornstein and Kevin Calame, brokers at Pinnacle Real Estate Advisors LLC, represented the buyer and seller, respectively, that paid $1.05 million for a 12-unit apartment building at 4630 E. Asbury Circle in Denver.

The property, built in 1962, sold for $87,500 per unit and $121 per sf.

The building is adjacent to Interstate 25 just east of Colorado Boulevard and north of Evans Avenue.

“This property had been recently renovated and stabilized by the seller and sold at an above-market capitalization rate,” said Hornstein, who noted that this property sold at a 7.34 percent existing capitalization rate. “The buyers were able to finance the purchase through Bank Financial at a 4 percent rate, fixed for a 10-year term, which enabled them to achieve their desired investment return,” he said.

Joe Hornstein of Pinnacle Real Estate Advisors LLC represented the seller of an eight-unit apartment building at 3500-3510 Tennyson St. in the West Highland neighborhood in Denver.

The building, constructed in 1973, sold for $806,500, or $100,813 per unit and $167 per sf.

“This property was marketed for 48 hours and received five offers, all at full list price or better,” said Hornstein, who noted the property sold at a 6.28 percent existing capitalization rate.

“By leveraging a multiple offer situation, we were able to find a buyer willing to close with no financing contingency in just three weeks,” Hornstein said “This is a perfect example of how sellers can benefit from marketing their properties to the masses instead of simply entertaining offers from interested buyers.” Grandma Properties LLC paid $539,000 to the Rozlynne Newman Trust for a four-unit apartment building at 1533 Ogden St. in Denver.

Adam Riddle of the Unique Apartment Group was the listing broker. The selling brokers, also from the Unique Apartment Group, were Tim Finholm, Sam Leger and Carlos Valencia. The building was 95 percent occupied at the time of the sale. It sold for a cap rate of 5.9 percent.