Colorado Real Estate Journal - August 19, 2015
When a lot of people hear the name “Starwood,” it would be understandable if they think of hotels. After all, Starwood Hotels and Resorts is the largest owner of hotel units in the country. But Starwood Capital Group also is a big player in apartments. In total, it has purchased 87,000 apartment units and condos nationwide. Most recently, Starwood paid $93.1 million to the Holland Partner Group for a metro Denver portfolio. The value-add portfolio included two communities in Aurora and one in Thornton. The portfolio consisted of: • The 188-unit Canterra at Fitzsimons, opened in 1984 at 358 Potomac St. in Aurora; • The 165-unit Silverbrook, which opened in 1985 at 15403 E. First Ave. in Aurora; and • The 319-unit Montair at 8900 Grant St. in Thornton. It also was built in 1985. The total sale price equates to $138,541 per unit and $151.48 per square foot. The portfolio was listed, marketed and sold by Pam Koster and David Martin of the Denver office of Moran and Co. “There was a lot of interest, both from buyers interested in the individual properties and buying them as a portfolio,” Koster said. “We ended up with 20 offers,” with Starwood rising to the top, she said. She said they required every bidder to make an offer for the properties on an individual basis, as well as purchasing the trio as a portfolio. “Interestingly, most of the buyers wanted to buy the entire portfolio,” Koster said. She said slightly more than 60 percent of the prospective buyers were from out of state, with about 40 percent local buyers. “For the most part, the majority of the people already have a presence in the Denver area and own properties here,” Koster said. “Maybe two or three of the candidates had not bought here before and were new to the area,” she said. Given the age of the three communities, they are ideal value-add properties. “In this market, you always have more investors chasing the value-add deals than the core properties.” That is because on top of the yield they get, they have the opportunity to improve the units and make a much bigger return on those investments, she said. “I’m guessing Starwood probably will be investing about $5,000 per unit across the properties,” Koster said. Starwood bought the communities through a portfolio that targets value-add deals, she said. “No. 2, Starwood likes to buy these bigger portfolio deals,” which gives them an immediate critical mass, she said. “Honestly, they are trying to put their money to work in chunks, typically $50 million and above, and not the small, building-by-building acquisitions,” Koster said. The demographics also are strong for the properties. For example, Montair, near Interstate 25 and West 88th Ave., has a daily traffic count of 166,000. Canterra, near Interstate 225 and East Sixth Avenue, and Silverbrook, near East Sixth Avenue and Chambers Road, have daily traffic counts of 40,000 and 31,000, respectively. In addition, the average sf of a unit at Montair is 995 sf, 21.8 percent bigger than the typical size of an apartment unit in the area. At Silverbrook, the average size of a unit is 908 sf, about 10.5 percent bigger than a typical unit in the Fitzsimons area, according to research by Koster and Martin. Other News Meritage Homes paid $4.25 million for 36.6 acres of land at the northwest corner of West 122 Avenue and Quebec Street in Thornton. Meritage can build 135 homes on the property. The seller was Midwest Building Professionals LLC. Fuller Real Estate brokers Bob Leino and Andrew Dodgen represented the seller in the transaction.