Colorado Real Estate Journal - November 4, 2015
Denver-based BMC recently paid $65 million to Belgarde Enterprises of Minneapolis for the 584-unit Liberty Creek Apartment Home Community in Aurora. The sale culminated a twoyear relationship between Matthew Joblon, CEO of BMC, and officials from Belgarde. With Liberty Creek, BMC has paid $162 million to Belgarde for a total of 1,933 apartment units in the Denver area. In its first deal with Belgarde, in 2013, BMC paid $25 million for the 384-unit Four Seasons apartment community in Westminster. “From that time on, we just had a great relationship with them,” said Joblon, whose company has bought 4,500 units in the Denver area since 2010 as well as developing the 218-unit Steele Creek at 3222 E. First Ave., the most expensive apartment tower ever built in Denver. BMC has sold about 1,000 of the units, leaving it with about 3,500. “When we went to the (first) closing with (Belgarde), there were no hassles; they were great,” Joblon said. “Sometimes sellers try to kind of stick stuff at the end, but these guys were a class act.” Then, Joblon’s partners at BMC sold a 550-unit apartment portfolio in Baltimore and wanted to do a 1031 exchange in Denver. Joblon got on the phone with Belgarde. “I know you guys have three more properties in Denver and my guys have this money, so why don't you sell two of them to me?” Joblon proposed. “They set a price, I had them underwritten in a week, and we closed in January,” Joblon said about that $72 million transaction. Recently, BMC had some more 1031 exchange money to invest. Once again, Joblon called Belgarde. “You know what, you guys have only one property left in Denver and it doesn’t make any sense for you, so why don’t you sell it to me? “They said, ?It works for us.' They set a price and I had it underwritten in a week, again. “It was really about being at the right place and the right time and it was all about the relationship,” Joblon said. It was a direct deal, with no broker involved, he said. BMC paid $111,300 per unit for the community at 13100 E. Kansas Drive. Records show that Belgarde paid $27.6 million, or $47,280 per unit, for Liberty Creek in February 2005. The property was built in 1981 and BMC has committed $3 million to upgrading the property. “We bought it way below replacement cost, but I don’t think that is a fair metric for evaluating the deal,” Joblon said. “After all, it is a 1980s product,” he said. “We bought it significantly below replacement cost, but you couldn't build this type of property in today’s market. “What I do think is that it was a fair price for us and a fair price for the seller,” he said. One thing he really likes is its location near the former Fitzsimons Army Medical Center, which now is home to the Anschutz Medical Campus, Colorado Science+Technolo-gy Park, the Children's Hospital and, eventually, the Veterans Affairs hospital. “We own a lot of land at Fitzsimons,” Joblon said. “We own four acres at the southeast corner of Colfax and Peoria, where a (retail center) is under development,” Joblon said. BMC bought the property with the Kentro Group. “We also have another property in Fitzsimons under contract, which will be a significant deal that we will be announcing shortly,” he said. Joblon said the Fitzsimons area and Cherry Creek are two of his favorite submarkets in Denver, even though they are so different. “We’re big fans of Fitzsimons, with all of the jobs being created out there,” Joblon said. “And there really isn’t too much supply being built to compete with existing properties,” he said. “We also are a big fan of Aurora,” Joblon said. “Aurora is very pro-business and easy to work with.” BMC’s equity partner at Liberty Creek is Los Angelesbased Oak Coast Properties. Oak Coast typically makes equity investments of $1 million to $20 million for deals with a total cost of $5 million to $75 million. “BMC’s track record and investment philosophy in Denver made them an ideal partner for Oak Coast Properties to work with on a deal like this,” said Phillip Nahas, Oak Coast Properties’ managing partner. “The value-add investment strategy employed for Liberty Creek Apartments is indicative of our firm’s overall portfolio strategy,” he continued. “Our sweet spot is the acquisition and renovation of quality assets in markets with strong fundamentals,” according to Nahas. “We aim to acquire strong cash-flowing assets that have room for bottom-line growth through property enhancements and increased rents,” Nahas said. He also said they target markets that are economically diversified and possess strong and sustained employment and wage growth. BMC would like to buy more apartment properties in the Denver area, but it is becoming harder and harder to find deals that pencil out, according to Joblon. “It’s pretty incredible how much properties have appreciated since we started buying in 2010,” Joblon said. “In many cases, prices have just about doubled since we first started acquiring properties,” he said. “We want to buy more assets, but we also plan to remain disciplined,” Joblon said. “If we find the right property and can acquire it at the right price, we will pounce,” he said. “If not, we will remain focused on what we have. We’re under no pressure to buy anything more, so we will only act on the right opportunity. We also have quite a bit in the development pipeline, so that is taking up quite a bit of our time, energy and focus.”