Colorado Real Estate Journal - July 20, 2016

Family sells Penwood Place

The Penwood Place Apartments had been in the same family, since the family’s late patriarch, David Neiss, built the pioneering 15-story apartment tower in 1974.

Although Neiss, who built an estimated 1,500-1,800 apartment units in a number of apartment high-rises in the Cheesman Park and Capitol Hill areas, died in 2010, the family only recently sold the 194-unit tower at 800 Pennsylvania St. in the Capitol Hill/ Governor’s Park area.

The family sold the building for $34.5 million.

The buyer was Fowler Property Acquisitions, whose headquarters is in California.

“It was bittersweet,” to sell the tower after being in the family’s hands for more than four decades, said Arnie Neiss, David’s son.

“It was Dad’s first building and his pride and joy,” said Arnie, a 60-year-old engineer who spent many hours working in Penwood Place, doing everything from sweeping floors for 25 cents an hour to working in the back office.

As a testament to its location and quality, the occupancy rate has basically never fallen below 95 percent.

The family enlisted the help of Jeffrey Hirschfeld of Antonoff & Co. Brokerage to help them sell it.

Hirschfeld is better known as a retail broker than a broker who specializes in apartments.

Indeed, he put the family members in a number of retail investments across the U.S., in 1031 exchanges with the proceeds from the sale.

In fact, he met David in 2000, when he put him in some retail properties in an exchange to defer capital gains on apartments he had sold.

Penwood Place was a sought-after property.

“Initially, I think 21 or 22 offers rolled in,” Hirschfeld said.

But they kept coming, even after Fowler had it under contract.

“I probably had 250 buyers who wanted it,” Hirschfeld said. “They came from all across the country. I could have sold it all day. I could sell it again right now.” One of the big attractions was that it basically had never been renovated.

“It was built in the 1970s and was pretty much untouched,” Hirschfeld said.

“Its rents are below market. It is a true value-add deal.” Broker Frank Farrell, principal of Farrell.RES, brought Fowler to the table.

“They are true value investors,” Farrell said. “They just loved this property,” Farrell said.

And it wasn’t just them.

Farrell, who typically lists properties, had two other buyers eager to purchase it.

“It’s a great property in a great location,” Farrell said.

“The Denver apartment market has never been this hot in my career and there is not market hotter than Capitol Hill,” he said.

Farrell first met David Neiss around 1980.

He talked to him about selling Penwood Place, but didn’t aggressively pursue the listing over the years.

“My sense was that the capital gains would be so high and it generated so much cash flow that he didn’t have a real interest in selling it,” Farrell said.

It is all but certain that the building could not be constructed today.

There were three turn-of-the-century mansions on the site that had to go to make way for Penwood Place.

Instead of tearing them down, a company salvaged each brick and anything of value inside of the homes at 800 Pennsylvania St.

“The wood, the craftsmanship, is not like anything being built anymore,” Arnie Neiss said.

“Today, they probably would have tagged those homes as historic and you couldn’t have built an apartment building on the lot,” he said.

“But it is at least nice that the homes were salvaged and the materials recycled, rather than demolished.” Penwood Plaza includes large, private balconies, a two-level, 255-car parking garage and an indoor pool.

“It was really a pretty innovative building at the time,” Arnie Neiss said.

“Dad used what was then a new structural method, called post-tensioned floors, which was a new way of forming the floors. They were able to put all the floors in in only 13 weeks.” He agrees with Farrell and Hirschfeld that the location can’t be beat.

“It is a great location,” he said. “It is a central location. And it has delivered a lot of value for the cost of building it.” He said Fowler will bring Penwood Place to the next level.

“The buyer is a great company and they do great renovations.”



Other News


An unidentified buyer paid $1.4 million, or $117,083 per unit, for a 12-unit apartment building at 809-825 Oak St. in Lakewood.

The property is blocks from the Oak Street light-rail station.

Robert Lawson, Jim Knowlton and Chris Knowlton of Pinnacle Real Estate Advisors worked with the buyers and sellers in the transaction.

“We received 12 offers in the first few days of marketing and ultimately went under contract above list price,” Knowlton said.

Both the seller and buyer were completing 1031 exchanges.

“The seller planned on exchanging into raw land for multifamily development and the buyer already owns multifamily property in Lakewood and saw the value-add potential in this property as a great opportunity to add to his existing portfolio,” Knowlton said.