Colorado Real Estate Journal - March 18, 2015
A San Francisco-based company, long bullish on the Denverarea apartment market, recently added to its local portfolio with a $65.5 million acquisition. Jackson Square Properties acquired the 298-unit M2 apartment community in southwest Denver. The sales price equates to $219,799 per unit The seller was the developer, Stoneleigh Cos. of Barrington, Illinois. Stoneleigh opened the community at 4560 S. Balsam Way in 2013. “This is a cool property,” said David Potarf of CBRE, who handled the sale with fellow CBRE brokers Dan Woodward and Matt Barnett. “They are really neat units that have really great designs,” Potarf said. He said the units also have “topof-the-line finishes” with hardwood floors and granite countertops. Some units come with attached garages and private entries. With this purchase, Jackson Square now owns nine communities in the Denver area with a total of 2,511 units, according to Apartment Insights, a multifamily database by Cary Bruteig, principal of Apartment Appraisers & Consultants. M2 is near West Hampden Avenue and Wadsworth Boulevard. “It actually is in Denver,” Potarf said. “It is kind of the area where Denver, Lakewood and Littleton border each other. Across the street, it might be Littleton, but M2 is in Denver.” The area is extremely attractive to investors, he said. “Everyone likes the West side,” Potarf said. “There is not as much competition as in other parts of the metro area.” It’s likely to stay that way, he said. Overbuilding does not seem to be an issue. “There is just not that much available dirt,” Potarf said. “There are some real barriers to entry on the West side,” he said. There was a lot of interest from prospective buyers for M2, he said. “We had double-digit offers from a wide mix of people,” Potarf said. “Offers came from private capital sources and institutional investors, both locally and from outside of the state. Ultimately, Jackson Square was able to get it.” The sales price reflects the interest in the community, he said. “Investors in Denver are willing to pay a premium to avoid the lease-up risk and uncertainty of a new development,” Potarf said. “Even when they pay slightly above the replacement cost, if they wait a year, they will have paid below the replacement cost,’ he said. “The price to build keeps going up.” Stoneleigh had built the Monterey apartment community across the street from M2. “I think that is why they called it M2, for Monterey 2,” Potarf said. Stoneleigh no longer owns Monterey. “They sold it and it has traded a couple of times since,” he said.