Colorado Real Estate Journal - December 7, 2016
Pembrooke on the Green has everything going for it as an apartment community – size, location and its value-add opportunity. With 959 units, it is one of the largest apartment communities near the Denver Tech Center. “And it has got a pretty irreplaceable location next to (Kennedy) golf course. It is three minutes from the Denver Tech Center and all of those jobs. And it’s already on a light-rail station that is now going to go the other way and connect to the airport, as well as downtown,” said Dave Potarf of CBRE, who listed and marketed the apartment community with fellow CBRE brokers Dan Woodward and Matt Barnett. Los Angeles-based Oak Coast Properties, according to public records, recently paid $128.35 million for the apartment community in Denver. Oak Coast bought Pembrooke on The Green from Bridge Realty Capital, based in Murray, Utah. “It’s a big one,” Potarf said. Bridge Realty acquired the community on 29.23 acres at 10700 E. Dartmouth Ave. in 2012 for $50.2 million, according to public records. In other words, Bridge Realty more than doubled its investment in four years. That appears to be one of the largest percentage gains of any institutionally sized property that recently sold in the Denver area’s hot multifamily market. “If the same investor would have put $50.2 million in the bank at today’s rates, roughly 1 percent for passbook savings account, to achieve the rate of growth, it would take 95 years to accomplish this,” noted John Winslow. “The rate of growth per month for this property since the last sales price was 2.06 percent, or a total of 155.77 percent appreciation since Dec. 31, 2012,” added Winslow, principal of Winslow Property Consultants. Winslow was not involved in the deal, but closely tracks income-producing real estate in the Denver area. Value deals, such as this one, always attract a lot of buyers, and Pembrooke on the Green was no exception. “The current owner had renovated less than 50 percent of the units, which gives the new buyer a real value-add opportunity,” Potarf noted. The renovation of Pembrooke on the Green will include: • Extensive upgrades to landscaping and outdoor furniture; • Parking lot, concrete, stair, roof and gutter repairs; and • Exterior upgrades, including to the leasing office, pool, clubhouses and laundry rooms, and mechanical work, including electrical and plumbing work. “Our capital improvements to the community, along with improved property management and oversight, will allow us to bring rents in line with similar market-rate properties in the region and drive additional ROI,” said Phillip Nahas, Oak Coast Properties’ co-founder and managing partner. “This asset continues OCP’s tradition of identifying, acquiring and adding value to superior assets acquired with conservative underwriting and superior management and producing above-market risk-adjusted returns for our investors,” he added. Also, the size in the area was a selling point. “It’s not very often that you acquire that many units in one purchase,” Potarf said. Oak Coast Properties paid $133,884 per unit, while Bridge Realty Capital paid $52,346 per unit. Oak Coast Properties paid about $206 per square foot for the community, while the seller paid about $80.42 per sf. Oak Coast Properties has earmarked $1.9 million in capital improvements for its value-add acquisition. “This acquisition marks our firm’s largest to date and brings our Denver portfolio to more than 2,300 units,” Nahas said. He noted the group has a portfolio in the metro area valued at almost $1 billion. “With the continued strategic alliances we have with our capital partners, we are committed to achieving above-market risk-adjusted returns through our investment strategy in Denver and other strategic markets across the country,” according to Nahas. The purchase illustrates how bullish his company is on the Denver area multifamily market, according to Nahas. The company noted that with more than 50,000 residents moving into the Denver area annually and for-sale new home construction remaining relatively sluggish, rental demand continues to push upward. Yearly demand for rental units is an expected 17,000 apartments, while new rental unit projections in both 2016 and 2017 anticipate only 14,000 new units coming to market. “Denver’s growing population is putting significant pressure on the housing market, with new unit deliveries unable to keep up,” Nahas said. “Positive employment growth combined with these forceful market dynamics provides a ripe opportunity to drive returns through the upgrade of existing apartment assets such as Pembrooke on the Green,” he said. Originally built from 1974 to 1980, Pembrooke on the Green boasts a current occupancy of 95 percent. The community includes 959 apartments set within 37 three-story buildings and offered as a mix of studios, one-bedroom and two-bedroom units. In-unit amenities include central air conditioning, fireplaces, walkin closets, cable TV hookups, garbage disposals and frost-free refrigerators. Brushed nickel fixtures, ceiling fans, skylights and vaulted ceilings adorn select units. Robust community offerings include a barbecue and picnic area, business center, carports, two clubhouses, community kitchen, dog park, fitness center, two heated swimming pools, sauna, laundry rooms, playground, soccer field, splash park and walking path. Denver-based BMC will manage the community. Pembrooke on the Green marks the fourth project in partnership with Oak Coast Properties and brings BLDG’s Denver multifamily management portfolio to approximately 5,000 units. “Pembrooke on the Green is one of the largest multifamily assets in the Denver metro area,” said Max Bresner, chief operating officer for BMC Investments, an affiliate of BLDG Management. “I am thrilled to run point on executing Oak Coast Properties’ vision for this property in collaboration with the talented team of professionals at BLDG,” he said.