Colorado Real Estate Journal - April 15, 2015
A Denver-based company recently paid $71 million for two apartment communities in the Glendale area submarket. Cardinal Group Investment bought Brittania Heights at 1251 S. Bellaire St. and the Blake and Allison apartments at 1235-1240 S. Birch St. from their longtime California-based owners. Combined, the communities have a total 555 units. Brittania Heights has 340 units and Blake and Allison have 215 units. That equates to a sales price of $127,928 per unit. That is far below the replacement cost, said Terrance Hunt of ARA Newmark, who handled the sale with fellow ARA brokers Jeff Hawks, Doug Andrews and Shane Ozment. “It would be very difficult to build a midrise development in that area today and you couldn’t possibly do it for less than $200,000 per unit,” Hunt said. The sellers, Howard and Catherine Stone of Santa Monica, and Ken Heller of Malibu, had owned the properties since 1990. Records showed they paid a total of $12.57 million for the properties. That equates to $22,648 per unit. Adjusted for inflation, in “real” dollars they paid the equivalent of $20.1 million, or $36,054 per unit. “They owned it forever,” Hunt said. The sale, Hunt said, illustrates two big trends in the Denver area: the growing attractiveness of the Glendale area by renters and the appetite for value-add properties by investors. The properties border Glendale, but they are in Denver, Hunt said. “They are considered part of the Glendale submarket,” Hunt said. “You can walk to the new Infinity Park in Glendale from them,” he said. The Glendale rental market is heating up, Hunt said. “A lot of young people who might prefer to live in Capitol Hill increasingly are instead renting in Glendale,” he added.“They really like that is it easy parking and they get larger units for less money.” The communities were built in 1970, with the exception of the Blake, which was built in 1972, according to public records and Hunt. “This is just a great value-add purchase,” Hunt said. “That is why it generated so much interest from buyers,” he said. It was part of a three-community portfolio, with the other property, Asbury Park Plaza Apartments near the University of Denver, being sold to a different buyer. (More information on the Asbury Park sale is in Other News). “It is not that often you can find a value-add property this size, which makes it even more attractive to buyers.” Cardinal plans to make it part of its Mint Urban Brand after a “large-scale renovation,” according to its website. Hunt said Cardinal will make more money off the renovations than it will from the purchase price. “They plan a major, major renovation and they will be able to substantially raise the rents when it is completed,” Hunt said. “That is why these value-add deals always attract so much interest, both from local and out-ofstate buyers,” he said. “This one was no exception,” Hunt said. The sellers, he said, decided to take advantage of Denver’s record-breaking market. “They exchanged into a newer product in North Carolina, I believe,” Hunt said. “They own properties across the country.” Hunt said it is interesting that when the properties were first built, they were targeting young professionals, as they are now. “Now, we are seeing the biggest influx of young people entering the workforce and the rental market since these properties were first built for young baby boomers,” Hunt said. “It’s an interesting part of the cycle,” he said.
-Horizon Real Estate Advisors, working with Irvine, California-based 29th Street Capital, purchased the 110-unit Asbury Plaza Apartments at 5170 E. Asbury Ave. in Denver. The sellers were Howard and Catherine Stone of Santa Monica and Ken Heller of Malibu, California. They sold it with two other Denver properties in a 1031 exchange. The sales price was not released, but records show it sold for $9.1 million. That equates to $82,727.27 per unit. The brokers who handled the transaction were Jeff Hawks, Doug Andrews, Terrance Hunt, Justin Hunt and Shane Ozment of ARA Newmark. Twenty Ninth Street, or 29SC, plans to invest about $850,000, or about $7,700 per unit, to improve Asbury Plaza. The buyer plans to upgrade the roof, windows, landscaping, corridors and residential amenities such as the barbecue area and rooftop deck. Interior work will include new appliances, countertops, fixtures, lighting and flooring. The exterior work will be completed within six months and the interior work will get underway as tenants vacate. “Our goal is to position Asbury Plaza as a convenient and updated rental option for residents seeking moderate-priced apartments in the booming Denver market,” said Todd Jaycox, senior vice president of acquisitions for 29SC. “We intend to invest in the asset, manage it more proactively and take full advantage of its central location within the Denver MSA,” Jaycox added. “Asbury Plaza is well maintained and will benefit greatly from strategic value-add improvements designed to modernize it and increase its appeal,” he said. -An unidentified buyer paid $1.7 million, or $58,621 per unit and $90.67 per square foot, for a 29-unit apartment building built in 1967 at 1960 Dallas St. in Aurora. Josh Newell, a senior adviser at Pinnacle Real Estate Advisors LLC, represented the local seller in the transaction.