Colorado Real Estate Journal - November 1, 2017
An Atlanta-based student housing asset owner/operator made its entry into the Colorado market with the first-ever arm’s-length sale of a purpose-built student housing property in Colorado Springs. Student Quarters paid an undisclosed price for The Lookout on Cragmor, a 71-unit, 157-bed student housing facility adjacent to the University of Colorado Colorado Springs campus. “The Lookout on Cragmor is a rare, first-of-its-kind investment opportunity in the booming Colorado Springs market,” said Saul Levy of ARA Newmark. “Purpose-built student housing has only been available in Colorado Springs since 2013 and this is the first property of its kind that has become available on the open market for trade. “The asset is practically on the UCCS campus, the fastest-growing university in the state in terms of new facilities and enrollment, which is up 60 percent since 2005. With the backing of the University of Colorado’s $1.22 billion endowment, UCCS is becoming an established regional force in higher education as the only university in the southern half of the state with over 10,000 students,” added Levy. Levy and ARA Newmark’s Kevin McKenna worked alongside Ryan Lang of the firm’s student housing team to represent Kansas-based Newsome Development in the sale of The Lookout on Cragmor. “It is an important transaction with it being not only the first student housing to ever trade but also being the first opportunity to acquire a property built in this decade of this size range. Most apartments being built are in the 200- to 300-plus-unit range,” Levy said of the asset, which was delivered at the start of the 2016-2017 school year. “It was well received by the market,” he added. More than 15 offers were received on The Lookout on Cragmor, which was sought-after by both student housing and traditional, market-rate investors. Located at 10 Cragmor Village Road, The Lookout on Cragmor is within walking distance of the university’s core campus facilities, including the University Library and Dwire Hall, which houses the colleges of Business Administration, Sports Management, and Languages and Cultures. The Lookout on Cragmor features granite countertops, stainless steel appliances, 9-foot ceilings, full-size front-loading washers and dryers, and Aquatherm heating and cooling. Each unit also comes fully furnished with a large flat-screen television and fully equipped kitchen. Currently, the property is fully occupied. Students rent units on 12-month leases. The acquisition represents the westernmost property in Student Quarters’ portfolio, which includes assets in Texas, Alabama, North Carolina, Georgia and Tennessee. The purchase by an out-of-state buyer also represents a growing trend within the Colorado Springs multifamily market. “We are seeing more and more new buyers come to the market,” said Levy. “Forty to 50 percent of our recent sales have been by buyers that previously didn’t own in the market and this is another example.” Other News • Skyline Real Estate Investments recently purchased the Courtyard Estates apartments in Colorado Springs for $11.37 million, or $64,574 per unit. The 176-unit property at 4330-4390 E. Pikes Peak Ave. was built in 1971. Tom Ethington, Rob Edwards and Mike Krebsbach of Pinnacle Real Estate Advisors LLC represented the local seller, Orris Family LLC, according to public records. “The seller had owned the property for over 20 years and was excited to 1031 exchange into more passive investments. The buyer is an experienced value-add operator and has a great vision for the property,” said Ethington. “This transaction was a win-win for both the buyer and seller.” “Our seller had received unsolicited offers well below the property’s actual value. We advised our seller to list the property for sale with us and allow us to get the property out to the open market. By doing this, we were able to create competition amongst the buyers and attain an offer that closed $1.37 million over the unsolicited offers they received,” added Krebsbach. • The Chapel Hills Mall Self Storage facility in Colorado Springs recently traded at a price of $2.85 million, according to public records. The 41,150-square-foot facility is located at 1825 Jamboree Drive and comprises a total of 342 units. Charles “Chico” LeClaire and Adam Schlosser, self-storage specialists in Marcus & Millichap’s Denver office, had the exclusive listing to market the property on behalf of the seller. The buyer, Storage Place-Chapel Hill LLC, was procured by LeClaire and Schlosser. The storage facility sits on an outparcel to the 1.1 million-square foot Chapel Hills Mall and was “spun off” from the mall in order to complete this transaction. Prior to the sale, the facility was being managed remotely from inside the mall with no on-site office. The new buyer plans to implement onsite management and improve the property’s web presence to better serve its customers. “The value of the storage facility was greatly enhanced as a result of the spinoff from the mall,” LeClaire said. “We received numerous offers from local and national buyers, creating a competitive bidding environment and the property ultimately sold well above the list price.” Built in 1998, the property is positioned on a hard corner at the signalized intersection of Jamboree Drive and Chapel Hills Drive. It is located in a densely populated area near various businesses and office buildings and is approximately 1 mile from the south entrance to the U.S. Air Force Academy. • A 1031 exchange group recently acquired the Chateau apartments – a value-add play in Colorado Springs – for $6.5 million, according to public records. The 50-unit community at 355 S. Union Blvd. was sold by a Denver group. The seller had renovated around 10 percent of the units. Effective rents are less than $1 per sf, around 30 cents below market levels, providing ample opportunity and upside for the new owner to make improvements to the 1970s-vintage property, noted Saul Levy of ARA Newmark, who listed the property with ARA’s Kevin McKenna. The sale of the community also represented the second-highest price per unit in Colorado Springs for a 1970s property, at $130,000 per unit. Chateau comprises two- and three-bedroom units with an average floor plan above 1,100 sf. • CSC3T LLC purchased a retail building at 555-559 S. Eighth St. in Colorado Springs. The 5,306-sf retail building sold for $1.39 million, or $275.02 per sf. Kevin Calame of Pinnacle Real Estate Advisors LLC represented the buyer. The seller was THJ&J LLC. “The buyer saw a great opportunity to trade out of his apartment building in Arvada into a lower-management, greater-return multitenant retail center,” stated Calame. • Nexus Commercial Realty, a real estate brokerage firm specializing in multifamily investment advising, opened its second office – a Colorado Springs location. Adam Riddle and Jason Koch co-founded the firm with a focus on profitable investments designed to help clients achieve lifestyle and wealth goals and objectives. The team has a combined 25 years of experience and $500 million transacted in multifamily deals.