Colorado Real Estate Journal - April 20, 2016
Steadfast Apartment REIT, based in Irvine, California, recently paid $32.4 million for the 217-unit Fielder’s Creek Apartments. Steadfast, a public, nontraded real estate investment trust, paid more than double what the seller, Foothills Investors LLC, paid for the property in June 2011, according to public records. Steadfast paid $149,308.75 per unit, while Foothills had paid $15.65 million, or $72,170 per unit, according to public records. Fielder’s Creek, at 3205 W. Floyd Ave., is in Denver. “We are fortunate to have excellent broker relationships and a team of people who are scouting opportunities that fit our investment profile of acquiring well positioned, institutional-quality apartment communities that have demonstrated high occupancy and income levels across market cycles and where we can pursue strategic property-level improvements that may enhance revenue and resale value,” a Steadfast spokeswoman said. Current monthly rents are in the $845 to $1,145 range. The community was built in 1983 on a 7.1-acre site. One of its selling points is that it is near the College View middle school and high school, which are part of the Denver School of Science and Technology school system – a series of charter schools that are operated as part of the Denver Public Schools system. College View was ranked the No. 2 middle school in Colorado for growth and the top school in Denver in 2013. Steadfast’s was one of eight offers for the property, according to Shane Ozment, a member of the ARA Newmark team that listed the property for the California based seller. The ARA Newmark team also included Terrance Hunt, Jeff Hawks, Doug Andrews, Anna Stevens and Amanda Meldrum. “We took four of those as part of the best and final offers,” Ozment said. A year ago, they might have received 15 to 20 offers, he said. “Depending on the location and the asset, we seem to be seeing not quite so many offers, but that isn’t affecting the final sales price,” Ozment said. “We are still getting very good prices and Steadfast made a very strong offer for Fielder’s Creek,” he said. One thing that limited the number of offers for this property is that is it not a 100 percent value-add deal, he said. The seller had renovated 60 percent of the units, he noted. Steadfast, he estimated, probably will spend $5,000 to $7,000 per unit on the remaining units. “Since it wasn’t a full value-add deal, that eliminated a lot of buyers,” Ozment said. “If you look at the buckets of money that are out there, there are some groups that either want 100 percent value-add deals or Class A, core-fund purchases,” which are either brand-new and are not in need of any improvements or at least 75 percent renovated. Buyers typically are more concerned about the internal rate of return rather than the cap rate, he said. “Everyone wants these value-add deals, because of the IRR,” he said. “If you can spend $5,000 or $6,000 per unit and get another $150 a month in rent, that is an excellent IRR,” Ozment said. In this case, the location was a big selling point. The average household income within a 5-mile radius is $73,305, ARA Newmark’s research shows. It also is five minutes from the Englewood CityCenter and the River Point shopping center. Anchor tenants at River Point include Costco, SuperTarget, Michaels, Regal Cinemas, Chili’s and Texas Roadhouse. It also is in a high barrier-to-entry market, Ozment said. Because of the lack of land, rising construction costs and strict building guidelines, only three properties have been built within a 3-mile radius in the past decade, he said. And only one community, which has 306 units, is under construction within a 4-mile radius, he said. “So if they raise their rents by $75 a month, where do you go? There aren’t many options if you want to stay in this area,” Ozment said. Steadfast, he said, “is an excellent owner,” and has a good reputation. “We’ve sold them five other properties,” in Colorado, Ozment said. Steadfast also owns PeakView by Horseshoe Lake in Loveland, PeakView at T-Bone Ranch in Greeley, Oasis in Colorado Springs, Bella Terra at City Center and Hearthstone at City Center, both in Aurora. Steadfast Apartment had been engaged in an initial public offering. The offering closed to new investors on March 24. All told, Steadfast has invested more than $1.25 billion in 31 apartment communities in 11 states. Other News GHC Housing Partners, based in Sherman Oaks, California, paid $5.5 million to Liberty Group Inc. for the 51-unit Squire Village at 1180 Grant St. in Northglenn. The sales price equates to $107,843 per unit and $107.51 per square foot. Squire Village, where the units are 100 percent subsidized by the government, was built in 1983. An unidentified buyer paid $1.25 million, or $78,125 per unit and $98.53 per sf, for a 16-unit apartment building at 1415 Yosemite St. in Denver. The property was built in 1960 and is just south of East Colfax Avenue. Joe Hornstein and Scott Fetter of Pinnacle Real Estate Advisors represented the buyer in the transaction. An unidentified buyer paid $1.05 million, or $75,000 per unit, for a six-unit apartment building with eight garages at 3373 S. Alcott St. in Sheridan. The buyer paid $103.94 per sf for the property built in 1981. Josh Newell, a senior adviser at Pinnacle Real Estate Advisors LLC, represented the local seller in the transaction. An unidentified buyer paid $865,000, or $108,125 per unit, for an eight-unit apartment building at 5562 Newland Way in Aurora. The property, built in 1971, is a mile form a future light-rail station. Matt Ritter and Jeff Johnson with the Johnson Ritter team at Pinnacle Real Estate Advisors LLC represented the seller and Josh Newell and Connor Knutson, with the Newell Team at Pinnacle, represented the buyer in the transaction. “We have a long-standing relationship with the seller and were happy to assist them with the sale,” Ritter said. “The market has improved dramatically since the seller purchased the asset, making their timing perfect,” Ritter added. An unidentified buyer paid $600,000, or $120,000 per unit, for a five-story apartment building at 357 Grant St. in Denver. The apartment building, built in 1888, is just off Speer Boulevard near the 9News building. Jeff Johnson and Matt Ritter, with the Johnson Ritter Team at Pinnacle Real Estate Advisors, represented the buyer in the transaction. Josh Newell represented the seller in the transaction. “The excellent central Denver location of the property made it very desirable among investors,” Johnson said. “We saw great value in the deal and in the end we were able to help our client satisfy the down-leg portion of his 1031 exchange by acquiring the asset,” Johnson added.