Colorado Real Estate Journal - May 4, 2016
Investors Management Group recently paid $23.8 million for the 186-unit Rolling Hills, the first institutional-quality apartment community to be built in Castle Rock. The community, at 1129 S. Eaton Court, was built in 1987. “There are only four apartment developments in Castle Rock with over 100 units,” said Shane Ozment, who was part of the ARA Newmark team that listed and marketed the property. Ozment and fellow ARA Newmark team members Terrance Hunt, Jeff Hawks and Doug Andrews represented the seller, Virtú Investments. According to public records, Virtú paid $16.6 million, or $89,247 per door, for the property in 2013. Investors Management paid $127,957 per unit. Ozment noted Rolling Hills was built near the peak of a previous building boom. The boom cratered with the collapse of energy prices and overbuilding, before the Denver area economy recovered in the early 1990s. “I wasn’t around at the time, but I think people looked at Castle Rock much the same way they do today,” Ozment said. “It is a great place to live and a submarket that is very convenient to the tech center,” he said. He noted that during rush hour, Interstate 25 is bumper-to-bumper going north, all the way from the tech center to 120th Avenue. “But going from Castle Rock to the tech center, you just zip along,” he said. One of the great things about Rolling Hills is that it is close to everything. “I mean, Castle Rock is a small town, even though there is a lot of development around the major interchanges,” Ozment said. While some Castle Rock residents don’t like all of the development underway or on the drawing board, all of the new and existing retail is a nice amenity for Rolling Hill residents, he said. “You are five minutes from the outlet stores and the new retail underway and you are five minutes from downtown Castle Rock, which has this really cute downtown,” Ozment said. There also is a King Soopers even closer to Rolling Hills, he pointed out. “You don’t have to get on I-25 to buy your groceries, which is really nice,” Ozment said. It also is close to the recently opened 320-acre Phillip S. Miller Park. “That is a great park, with things like a climbing wall and a zip line,” Ozment said. Some people who live in Castle Rock work in Colorado Springs, he noted. “Rolling Hills is a great choice for a household where one person works in Colorado Springs and the other in the tech center,” he said. The area also is known for its schools, he said, which can be another drawing card, he said. Rolling Hills, as it name implies, is based on top of a hill. “It has fantastic views of the mountains,” Ozment said. “It’s also off the beaten path a bit,” he said. “The good news is that is really quiet. The downside is that it doesn’t have quite the visibility it would if it was right off I-25. It’s a destination location.” He said the ARA Newmark team received more than 10 offers for Rolling Hills. “We would have received even more, but there was a debt assumption,” Ozment said. The original amount of the loan that needed to be assumed was $12.3 million and carried an interest rate of 4.84 percent. A debt assumption automatically removes some prospective buyers from the equation, he said. “A lot of investors are buying yield,” Ozment said, and want to get a new loan with two or three years of interest only to maximize the cash-on-cash return, he said. The flipside is when a buyer assumes the existing loan, there is less competition, so the ultimate buyer typically purchases it for a little less per unit. “You are buying the property at a lower cost basis, so when you sell it, especially in a market like this that is appreciating so fast, you get a bigger pop when you sell it,” Ozment said. Other News Hamilton Zanze paid $23 million for the 156-unit Belle Creek Apartments in Henderson. Belle Creek, at 10754 Belle Creek Blvd., includes 6,256 square feet of retail on the ground floor. The seller, a real estate investment trust, was represented by Jordan Robbins and Jeff Haaf of the Denver office of Holliday Fenoglio Fowler LP. HFF’s Houston office also arranged $18.2 million in financing on behalf of the buyer. Embrey Partners Ltd. purchased a 15.22-acre site at 6200 Castlegate Drive in Castle Rock, where it plans to develop a 312-unit apartment community. The sales price was not released, but records show San Antonio based Embrey paid $7.48 million, or $11.29 per sf, for the 662,995-sf site. The sellers, Alberta Development Partners LLC and Forum Real Estate Group, were represented by Steve O’Dell and Chris Cowan of ARA Newmark. The site is within the Promenade at Castle Rock, a mixed-use development. The new community will be called the Ledges at the Promenade. “The Ledges at the Promenade is set for a core Castle Rock location which will become a one-of-a-kind destination due to Alberta's efforts to bring quality retailers and shopping previously nonexistent in the area,” Cowan said. “Embrey was quick to identify and pursue this special opportunity,” Cowan added. “Together, they’re creating a dynamic and unique place to live,” he said. Community amenities will include a 9,000-sf club, fitness and recreation facility, a dog park with a heated dog wash station, a bike and ski repair shop and a resort style pool and deck area. “The Embrey Partners team is honored to be selected as part of Alberta Development Partners’ newest project in Castle Rock to create a top-notch development for future residents,” said Jeff Booth, executive vice president at Embrey. “The Ledges at the Promenade will offer convenient walkability to more than 1 million square feet of adjacent shops and retail, which will significantly increase the quality of life for future residents,” Booth said. An unidentified buyer paid $1.53 million, or $84,722 per unit and $131.18 per sf, for the 18-unit Kendall Street Apartments in Wheat Ridge. Kendall Street was built in 1947 and is located at 4265, 4275, and 4295 Kendall St. Both sides of the transaction were handled by Joe Hornstein and Scott Fetter of Pinnacle Real Estate Advisors. “The buyer intends to update apartments and increase rental rates,” Hornstein said. An unidentified buyer paid $1.44 million, or $239,167 per unit and $274.45 per sf, for a six-unit apartment building at 2464-2480 E. 14th Ave. in Denver. Joe Hornstein and Scott Fetter of Pinnacle Real Estate Advisors represented the seller in the transaction. “This was probably one of the nicest converted mansion investment properties I have sold,” Hornstein said. “The buyers recognized the outstanding location and the quality of the finishes, and were willing to pay a premium for it.”