Colorado Real Estate Journal - June 1, 2016
The apartment communities are 44.6 miles apart from each other, at the opposite ends of the Denver metro area. But the 300-unit Fox Ridge Apartment Homes at 8225 S. Poplar Way in Centennial and the 216-unit Canterwood at 4870 Meredith Way in Boulder have a lot in common. For one, both communities share common ownership. And both Fox Ridge and Canterwood recently received new loans of a total of $77.5 million. Eric Tupler, a senior managing director in Denver’s HFF office, arranged the financing on behalf of the owner, Philadelphia-based Resource America. Records show that Resource America, which trades under the symbol REXI on the New York Stock Exchange, paid $125.25 million for the two communities. REXI paid $65 million, or $300,926 per unit, in late 2015 for the Canterwood and paid $60.25 million, or $200,833 per unit, earlier this year for Fox Ridge. Tupler secured $40.2 million in financing for Fox Ridge and $37.3 million for Canterwood. “We went out to the market both as individual loans and together,” Tupler said. “We asked lenders to quote individual loans for either one,” as well as a package, to give the borrower the widest range of options, he noted. “We wanted to be able to create the most interest to give lenders the largest opportunity to pursue them separately or together,” Tupler said. It worked. “We had a tremendous amount of interest,” Tupler said. Interest came from life insurance companies, Fannie Mae lenders and banks, he said. The same lender decided to refinance both properties. Tupler declined to identify the lender, but records indicate it was Allstate. “We selected a life insurance company for two reasons,” Tupler said. The first reason is that the company “gave us very competitive terms” for the seven year loans, he said. The second reason was that the prepayment penalty terms were very flexible and favorable, he said. The insurance company that made the loan, he said, liked the location of both properties. “They liked the demographics of the area, as well as the expertise of Resources Real Estate and the cost basis” of the purchase price for the two properties, he said. The insurance company also “liked the fact that Resource plans to spend a significant amount on capital improvements for both assets,” Tupler said. While the communities are at the opposite ends of the metro area, they are similar to each other in that they have a value-add component, he said. Investors like having a value add component, as their return on the investments greatly outperforms returns on the acquisition. “They are going to bring both properties up to a new standard,” Tupler said. The lender had been active in making loans in the Denver area in the past, “but in more recent years has been underexposed in Denver,” Tupler said. While not naming the lender, that is an apt description of Allstate. That may change, however. “They are very interested in doing more loans in Denver,” Tupler said.