Colorado Real Estate Journal - May 7, 2014
A privately held real estate investment firm acquired a sought-after Colorado Springs apartment community in the highest priced sale in the city this year. The Praedium Group paid $48.5 million for Bella Springs, a 364-unit, Class A multifamily community at 1050 Milano Point in the Northgate submarket. “Investor interest was strong in this deal, mainly due to the high-quality property in an outstanding location in Colorado Springs,” said Jordan Robbins of HFF, who marketed the property on behalf of a joint venture between Griffis/ Blessing Inc. and Consolidated Investment Group with HFF’s Jared Buffington. “In addition to its proximity to the prestigious United States Air Force Academy and the highly anticipated Copper Ridge mixed-use development featuring Bass Pro Shops, Bella Springs sits within one of Colorado Springs’ highest demographic areas. Furthermore, the asset is situated within the Academy School District 20, which is widely recognized as one of the top school districts in the state of Colorado. Coupled with outstanding panoramic views of the Rocky Mountains and numerous community amenities, Bella Springs presented prospective buyers with a high-quality investment opportunity with significant upside by continuing a proven value-add strategy,” he added. Bella Springs also is located near a number of large employers, including Progressive and Federal Express. “These drivers got the buyer comfortable that the property would be in high demand for years to come,” said Robbins. Griffis/Blessing purchased Bella Springs, built in 2001, in April 2006. The community’s acquisition was part of a private equity fund raised by Griffis/Blessing in 2004. The fund originally held 14 assets, of which 11 have been sold. “Our value-add strategy used at Bella Springs was in alignment with our usual plan to enhance equity returns for our investors,” said Gary Winegar, chief investment officer for Griffis/Blessing. “This successful strategy created wide market interest in the asset and we are pleased with the pricing received on this sale.” Over the hold period, Griffis/ Blessing executed a value add strategy, which included enhancements to unit interiors, including flooring, light fixtures and upgrades to the kitchens and bathrooms. Management also achieved market rents higher than comparable properties, Winegar noted. At the time of sale, Bella Springs was 95 percent occupied. Bella Springs features a mix of floor plans, including townhome-style units with direct-access garages, ranging from 633 square feet to 1,348 sf. The community includes a heated, resort-style swimming pool and spa, fully equipped fitness center, barbecue area, clubhouse, theater room and business center. The Praedium Group plans to make unit upgrades, common area upgrades and to repaint the property. The buyer has owned a number of apartment properties in Colorado Springs in the past and currently owns communities in Denver as well. The property was acquired free and clear of existing debt. HFF also secured a $31.53 million, five-year, 3.08 percent, interest-only acquisition loan on behalf of the buyer through a correspondent life insurance company. HFF’s debt placement team was led by Josh Simon, Eric Tupler and Kristian Lichtenfels. “The interest level on the financing side was extremely high with multiple fixed-rate options available from life insurance companies as well as the agencies. At the end of the day, the borrower selected a life insurance company financing option that was fully customized to their business plan with significant flexibility built in up front,” said Simon. The Praedium Group focuses on underperforming and undervalued assets throughout the United States. Since its inception in 1991, it has completed more than 350 transactions representing $9.3 billion of capital, including 70,000 multifamily units and 43.3 million sf of commercial space.