Colorado Real Estate Journal -
When Pat Stucker and Jeff Haag of the Denver office of Cushman & Wakefield listed the 384-unit Legacy Heights apartment community in Federal Heights, there was no shortage of interested buyers. “Basically, there were 15 offers,” Stucker said. “We received offers from the East Coast to the West Coast, from Chicago to California. A lot of California buyers really like apartments in Denver.” They ended up selling the community at 2700 W. 103rd Ave. to Holland Residential, Denver, for $42.5 million. The seller was Fairfield Residential of San Diego. “Holland Residential is based in Portland, Ore., but they have been in Colorado for a long time,” Stucker said. “They have bought some smaller projects for their portfolio here and in the Western United States. We sold them another 384-unit a couple of years ago, but that was a bit older development, so I think this represents their largest purchase in the Denver area.” The sales price equates to $110,677 per unit. “They bought it below replacement cost,” Stucker said. “Replacing those units would start at $135,000 per unit. Still, we think it was a strong price.” The community, which was 96 percent occupied at the time of the sale, was constructed in 1998. “Anything that was built in the late ‘90s or the early 2000s attracts a lot of attention,” Stucker said. ”The fact that these types of properties are 10 or 12 years old means they probably have not had value-add interior renovations,” Stucker said. “Yet, they are of a vintage that typically comes with a high-quality amenity package. So buyers see a real opportunity for apartments built during that period as prime value-add opportunities.” Holland Properties is well versed in those type of value add repositionings, Stucker said. “That is what they are known for,” Stucker said. “They have a very good record of renovating a number of the apartment units and then being able to raise rents.” Another thing that made Legacy Heights attractive is the unit size, Stucker said. “It primarily has smaller units,” Stucker said. “I think they were primarily around 748 square feet, while generally that vintage product in that area are typically around 900 sf.” He said in that corridor and submarket, rental rates have been rising. “Since their main competition is coming from larger and newer units, renters were paying more per month,” Stucker said. “The rental increases were pushing people out of those properties and they were coming here, where they would pay less but have similar amenity packages.” While many people may think of Federal Heights as being a market that serves many lower-income, blue-collar renters who would be extremely price sensitive, Stucker said Legacy Heights has a prime location. “It is very close to 104th Avenue, which is the boundary between Federal Heights and Westminster,” Stucker said. “Northwest Westminster tends toward much higher-dollar homes. It has expensive homes and strong income demographics. Legacy Heights allows renters to be very close to those high-demographic areas and is very close to a number of employment centers. It is close to Interlocken in Broomfield and it is easy to take 104th to I-25 and get to Denver. It really is a fairly central location that provides good access to multiple employment centers.”