Colorado Real Estate Journal - August 17, 2016
When apartment developer Lauren Brockman was unveiling his plans for an apartment community on the former Mercy Hospital site, he expected the soft apartment market of 2004 to be much stronger when the 240 units in three buildings opened in 18 to 24 months. "Where else are you going to have a multifamily community like this up against what is really the largest urban park in Denver? This is a great location that can't be duplicated," Brockman told the Rocky Mountain News in 2004. Fast-forward a dozen years. IMT Capital recently paid $70.95 million, or $295,625 per unit, for the community at 1600 Fillmore St. The seller was a Blackstone Group entity. New York-based Blackstone Group, one of the largest real estate investment companies in the U.S., paid $57.95 million for the property in 2014, according to public records. That equates to a 22.4 percent gain on its investment in two years. It was called Retreat at the Park, but California-based IMT has renamed it as IMT at City Park. Blackstone was represented in the transaction by Jordan Robbins and Jeff Haag of the Denver office of HFF. Although Brockman initially developed the site in 2004, the community is a hybrid of the old and new. “Actually, it was a redevelopment,” Robbins said. “It was three buildings. One of them was redeveloped from the old hospital,” Robbins said. “Mercy Hospital had used that building as an old administrative building. I think it was built in the 1920s. The other two buildings were developed by Lauren Brockman around 2005,” he said. IMT outbid a number of competitors to land the community. “There was a ton of interest,” Robbins said. “We showed it more than 25 times. Maybe even 30-plus times.” Offers came from California, Texas and other states, as well as from Colorado, he said. A wide mix of buyers wanted it. “We had offers from individual funds, high-net-worth guys and a lot of interest from institutional investors,” Robbins said. Brockman was right on target when he described the development as a rare opportunity. “It is really hard to get that kind of scale in the City Park area,” Robbins said. “It’s a great location, right across from City Park,” he said. The area has improved immensely since Brockman first developed it. Today, its proximity to East Colfax, putting it within walking distance of many trendy bars and restaurants, is a big selling point. In the mid-1980s, Colfax was still a gritty street that had not yet turned around. “It also has a value-add component, especially with an older building,” Robbins said. The mix of the old and new also makes it attractive to a wide range of renters, he said. “You have the older building, as well as more modern units,” Robbins said. “You don’t find that kind of mix in many apartment developments. You have really unique floor plans in the older building. Some new buildings have cookie-cutter floor plans, but that is not the case here.” Barriers to entry made it that much more attractive to investors, he said. “The lack of opportunities to build competing product in the area drove a lot of the interest,” Robbins said. Other News An unidentified buyer paid $6.6 million for the 50-unit Maryel Manor, which provides government-subsidized housing at 12555 Sheridan Blvd. in Broomfield. The sale price for the 3-story building built in 1983 equates to $132,000 per unit. Jules Hochman and Justin Brockman, senior advisers at Pinnacle Real Estate Advisors LLC, represented the seller in the transaction. An unidentified buyer paid $1.25 million, or $140,625 per unit and $120.32 per square foot, for an eight-unit apartment building at 9493 W. 14th Ave. in Lakewood. The building is two blocks from the Garrison light-rail station. Robert Lawson, a senior adviser at Pinnacle Real Estate Advisors, represented the buyer in the transaction. “The high demand for apartment buildings priced below $2 million in the Denver metro market makes it very challenging for investors to successfully compete for properties,” Lawson said. His client was not the first investor seeking the property. “When we first looked at this opportunity, it went under contract before we had time to evaluate the true potential,” Lawson said. “However, the property fell out of contract and came back on the market so the first day we toured the property we wrote an offer and secured the deal quickly,” Lawson said. “This property was the buyer’s first acquisition in the Denver market, and he was able to find a quality asset in a great location within walking distance to light rail and with immediate upside in rents,” according to Lawson. “He plans on renovating a few of the units and holding onto the property long term,” he said. An unidentified buyer paid $977,500, or $166,250 per unit and $166.25 per square foot, for a six unit apartment building at 2210 S. Dexter St. in Denver. Kevin Calame and Matt Lewallen, senior advisers at Pinnacle Real Estate Advisors, represented the sellers in the deal. “The owner took advantage of this seller’s market and will be trading into a triple-net retail deal with a higher cap rate and less management-intensive investment,” Calame said.