Colorado Real Estate Journal - July 15, 2015
Seagate Properties, based in San Rafael, California, recently paid $65 million for the 318- unit Environs apartment community in Westminster. “We had a ton of offers. We had 15-plus offers,” said David Potarf, who handled the sale with fellow CBRE team members Dan Woodward, Matt Barnett and Brady O’Donnell. O'Donnell of CBRE's Debt and Structured Finance team financed the property, providing a sub-4 percent interest rate for a 10-year loan with five years of interest only. The Environs is not your typical suburban, garden-style apartment community, according to Potarf. “This is a really unique property,” Potarf said. “It is kind of a mixed-use property, with a wide variety of styles. It has condo-style apartments, patiohome style and single-family home types of apartments. It is really a one-of-a-kind property,” he said. The breakdown, by apartment style, is 110 apartments, 71 patio homes, 94 townhomes and 43 single-family homes. The Environs is more attractive to families, given the large number of residential-style units, Potarf said. Indeed, an exit strategy could be to eventually convert some or all of the units to for-sale properties. “The market for single-family homes in the Denver market area has been very active,” CBRE noted in its marketing material for the Environs. “With a limited supply of townhomes, condos and single-family homes in the area, a staged conversion is feasible,” according to the CBRE team. “A buyer could purchase the property and sell off whichever home type is in most demand at the time. The added advantage to owning one of the Environs homes could be access to the community amenities,” such as the swimming pool and recreation center. The community sits on 33 acres at 3323 W. 96th Circle. It was built in 1984. Given its age, it also represents a value-add opportunity, Potarf said. “Absolutely,” Potarf said. “The seller had upgraded some of the units, but there are a number of them that can still be rehabbed.” Investors are drawn to valueadd deals because those typically provide a better return on their investments than the actual purchase. Records show that the seller, San Francisco-based Hamilton Zanze and Co., paid $39.65 million, or $142,686 per unit and $124.69 per square foot, in 2007. Seagate paid the equivalent of $204,403 and $169.42 per sf. That equates to a 63.9 percent increase from its original sales price. Seagate and other prospective buyers also liked the location of Environs, Potarf said. “The location of Westminster is a strong address,” Potarf said. “Usually, not that much comes on the market up there, so when a property does, it always generates a lot of interest. “Westminster is really a great location, because it is kind of halfway between Denver and Boulder.”
Steadfast Apartment REIT, based in Irvine, California, recently paid a total of $91 million for the 304-unit Bella Terra at City Center and the 360-unit Hearthstone at City Center. Both are in Aurora. Steadfast Apartment REIT owns three apartment communities in Colorado, with a total of 916 units. “Denver and its surrounding cities are experiencing solid economic fundamentals compared to other national cities,” said Ella Neyland, president of Steadfast Apartment REIT. “This includes employment, population growth and renter demand,” Neyland continued. “Strong employment is a key driver in Steadfast’s acquisition strategy, and Denver’s unemployment rate fits into Steadfast’s target markets when acquiring apartment communities,” according to Neyland. “Additionally, limited new apartment construction in the Aurora submarket should keep demand healthy for Bella Terra at City Center and Hearthstone at City Center for the foreseeable future.” Bella Terra Center was built in 1980 on almost 10.6 acres. The community has 15 twoand three-story garden-style buildings, with studio, oneand two-bedroom homes averaging 676 square feet with an average monthly rent of $917. Amenities include a clubhouse, fitness center, swimming pool with spa, business center, outdoor basketball court, playground and a picnic area with barbecue stations. Bella Terra at City Center is currently 98 percent occupied. Hearthstone at City Center is two miles from Bella Terra and was built in 1984. Hearthstone has one-, twoand three-bedroom apartments in five different layouts ranging from 720 to 1,501 sf. Average inplace monthly rents are $1,038. Amenities include a fitness center, swimming pool, business center and a playground with a basketball court. Both properties will undergo a moderate revitalization strategy to unit interiors and exterior common areas. Bella Terra at City Center and Hearthstone at City Center also benefit because they are close to the Denver Tech Center business corridor, which has more than 40 million sf of office space. They also are close to the 578- acre Anschutz Medical Campus. Additionally, the communities will benefit from FasTrack rail lines that are scheduled to open next year that will link Aurora to key regional rail routes, including a train to the Denver International Airport. n An unidentified buyer paid $6.6 million for the 57-unit Lynnewood Apartments at 5579 S. Windermere St. in Littleton. The sale price equates to $115,789 per unit and $144.52 per sf. The building was constructed in 1972. Josh Newell, a senior adviser at Pinnacle Real Estate Advisors LLC, represented the local buyer and seller in the transaction. n An unidentified buyer recently paid about $2.7 million, or $179,266 per unit, for a 15-unit apartment building at 2421 S. Gaylord St. in Denver. Matt Lewallen and Kevin Calame, senior advisers at Pinnacle Real Estate Advisors LLC, represented the seller in the transaction. “The buyer will continue the renovations the seller began and looks forward to moving more rents to market as the units turn," Lewallen said. n An unidentified buyer paid $1.24 million for two apartment buildings at 1617 Alton St. and 15204 E. Eighth Ave. in Aurora. Joe Hornstein and Scott Fetter, senior advisers at Pinnacle Real Estate Advisors, represented the seller in the transaction. “This was a portfolio purchase of two low-income housing properties in Aurora,” Fetter said. “The seller enlisted us to find a buyer who would continue the Community Housing Partner’s mission of providing affordable housing to families in Aurora,” Fetter continued. “The seller found a great buyer and is excited to see the properties go to a great owner with experience in low-income housing,” he said. n An unidentified buyer paid $485,000 for a six-unit apartment building at 3340 S. Canosa Court in Englewood. That equates to $80,883 per unit and $159.75 per sf. The property was constructed in 1951. Josh Newell, a senior adviser at Pinnacle Real Estate Advisors LLC, represented the local seller in the transaction.