Colorado Real Estate Journal - October 5, 2016
Stephen Tebo is “Mr. Boulder” when it comes to commercial real estate. Since he began his real estate investment in 1973, Tebo Properties’ portfolio has grown to more than 300 properties. The majority of the more than 3 million square feet of office, retail and industrial space controlled by Tebo Properties is in or near Boulder. That is why it was a bit surprising that Tebo, with no fanfare, earlier this year acquired an apartment community. And the 259-unit Southview Place Towers is in Littleton, far from the Boulder corridor. Tebo-Orvis LLC purchased the property at 5820 S. Windermere St. for $30.5 million, according to public records. Hudson Ideal Co. was the seller. However, if you are an apartment broker, don’t bother making a cold call and pitching properties to Tebo. You would be wasting your time and Tebo’s time. The acquisition does not signal that Tebo is about to add multifamily properties to his portfolio, or that he wants to expand his footprint in Littleton. “It’s my first. Period,” said Tebo, regarding the acquisition. So why did he break from tradition after all of these years, nay, decades, and purchase an apartment building? “I just thought it had some good upside in it,” Tebo said. “It needed a lot of remodeling and had a lot of deferred maintenance. What we are good at is bringing it up to modern standards and making it a more valuable asset.” He said he will be investing $5 million to $6 million into the property. The renovation for the property, built in 1972, not only makes good business sense, but also became a necessity last spring, as a fire damaged the building, requiring all of the residents to move out for six months. There are other value-add deals out there, of course. But Tebo said this purchase had special circumstances. “My partner is managing it,” he said. “Boulder is my main comfort zone,” Tebo said, adding that he has no interest in driving to Littleton. He described it as a “one-off” purchase that was not on the market. The sale did not involve a broker, he said. John Winslow, who was not involved in the deal but has been following the local commercial real estate market for decades, said he was surprised when Tebo bought the property. “I thought he may be buying it with a personal friend or just found a very good opportunity,” said Winslow, principal of Winslow Property Consultants. Winslow said most commercial real estate investor stick to their knitting. “Most investors stay with one discipline of commercial real estate, but profit begets profit and it spends the same way if it was a shopping center in Boulder,” Winslow said. “In the past year, I have seen people buy out of their discipline only occasionally, but it makes sense if there is money to be made and his co-investor is going to manage it,” Winslow added. In any case, he said Tebo made a savvy deal. “A Littleton apartment at $116,000 per door is a very good price for the buyer,” Winslow said. Tebo said one of his bankers had a client who was in need of a financial partner for Southview Place. “He asked if I would be interested in it,” Tebo said. The acquisition hasn’t made him want to expand into the multifamily asset class. “No, not really,” Tebo said. “I suppose never say ‘never,’ but I doubt it.” The multifamily market, of course, has been the hottest asset class in the Denver area since the Great Recession ended. Asked his thoughts on the multifamily market in general, Tebo said, “A lot of stuff is going up. I think that is going to slow down substantially.” As far as his home turf: “I think this is just about the best year Boulder has ever had.” Is he worried? “I don’t think it is a bubble, but you never know. Ask me in a year or two.”