Colorado Real Estate Journal - September 7, 2016
ColRich Multifamily, a family owned real estate development and investment firm based in San Diego, recently added to its large Denver area apartment portfolio with the acquisition of the 608-unit Waterfront community in Lakewood. The $94.26 million ColRich paid for Waterfront marks its single biggest acquisition to date in the Denver area, both in terms of the price and the size of the community at 10555 W. Jewell Ave. With this purchase, ColRich owns just fewer than 4,600 units in 13 apartment communities in the Denver area, making it the second largest owner of apartments in the metro area. Only Starwood Capital, with 7,643 units in 25 apartment communities, owns more units in the Denver area, according to Apartment Insights, the apartment database owned by Cary Bruteig. From 2011 to 2016, ColRich invested almost $511 million in Denver area apartment units, according to Apartment Insights. Prior to the acquisition of Waterfront, ColRich’s largest purchase in the Denver area had been the $64.24 million it had paid late last year for the 492-unit Tuscan Heights in Northglenn, according to Apartment Insights. ColRich paid the equivalent of $155,033 per unit for Waterfont, which was built in two phases in the early 1980s. The sales price is a 55.8 percent increase over the $60.5 million that the seller, Fowler Property Acquisitions, had paid for it 2012, according to public records. Fowler acquired it from Carmel Partners as part of the late apartment mogul Kal Zeff’s holdings. When Zeff owned it, it was called Carmel Waterfront. According to public records, ColRich purchased it in two separate transactions – $55.86 million for 385 units and $38.4 million for 253 units. “It was really one sale,” said David Potarf, who listed and marketed the 26-building community on a 24.5-acre site for Fowler, with fellow CBRE brokers Dan Woodward, Matt Barnett and Jake Young. “We had a lot of interest in it” from prospective buyers, Potarf said. “We were well into double-digit offers,” he said. Investors are always drawn to communities on the west side, he said. Investors like the area because of its easy access to downtown Denver and the mountains, the job opportunities, and because renters like the area for lifestyle reasons. “This property is right on a lake,” Potarf noted, which is an amenity not many apartment communities can offer. The size of the community also drew a wide range of investors, he said. “A 600-unit development kind of gets the attention of investors.” Fowler sold it because the fund that held it was selling its assets, according to Potarf. “I think the fund that owned it had a six-year life and it was approaching that time period,” Potarf said. Fowler was able to take advantage of today’s strong Denver area apartment market. “They did really well with this,” Potarf said. “They had a pretty significant return on their investment.” Despite its age, he said Waterfront wasn’t a true value-add deal. “About 90 percent of the units already had been updated.” This sale also represents further evidence that the Denver area market remains attractive to investors, especially those from the West Coast. Although apartment units have been selling at record prices locally, they still appear to be bargains compared with the low cap rates apartment communities are selling for in California, he noted. A big reason that apartment sales have remained strong is because interest rates have remained so low, he said. “Since the beginning of the year, people have been talking about how interest rates are going to go up and all they have done is go down,” Potarf said. “At some point, interest rates will go up, of course, and sellers will have to bite the bullet. But as long as Denver’s economic fundamentals remain strong and young people keep moving here, the robust demand from investors will continue,” he said. Meanwhile, other ColRich Holdings in the Denver area, in addition to Waterfront and Tuscan Heights, include: • The 358-unit Alta Springs in Denver, • The 480-unit Conifer Creek in Aurora, • The 324-unit Dayton Crossing in Denver, • The 312-unit Greenwood Point in Englewood, • The 290-unit Lakeview Tower at Belmar in Lakewood, • The 284-unit Lodge at Aspen Grove in Denver, • The 228-unit Park Place at 92nd in Westminster, • The 357-unit Sandpiper in Westminster, • The 324-unit Village Creek at Brookhill in Westminster, • The 228-unit Westbury at Westminster and • The 320-unit Woodstream Village in Denver.