Hunting the Wild Value-Add
Value-add apartment deals are doable in Denver, according to Oak Coast Properties CEO Matthew Heslin. You just have to turn over a lot of stones to find the right B and C properties. (Be careful though, if we've learned anything from turning over stones, it's that spiders probably lurk there.)
This week Oak Coast and Redhill Realty Investors acquired One Dartmouth Place Apartments for a bit more than $30M. It’s Class-C, Matthew tells us, but with the advantage of access to major jobs and transit centers (it’s near the RTD Nine Mile Station), which makes it a prime candidate for a value-add play. (Just like our geometry class in high school, with a little elbow grease you can make a C into an A. Or in our case a B-.) Locations like that are a little tough to find, but not impossible. The SoCal-based investor also likes Denver as a market, which has strong fundamentals that aren’t likely to weaken any time soon.
According to Matthew, Oak Coast and Redhill are going to spend $2.6M to upgrade the 418-unit property, which mostly features one-bedroom residences. Planned renovations include the addition of black appliances, new kitchen and bath counters, upgraded light fixtures, paint and flooring upgrades, as well as the creation of a new onsite dog park. (Dogs might be one of the most powerful consumer bases and they don't even have any money.) The upside from investing in the upgrades, he says, is “too strong to ignore.”
Another California-based investor, Rondell Homes, snapped up a separate value-add in Colorado this week, the 364-unit Winridge Apartments and Townhomes in Aurora, for more than $34M. According to ARA’s Terrance Hunt, who repped the seller along with colleagues Shane Ozment, Jeff Hawks, and Doug Andrews, the buyer will be able to capitalize on rent growth mainly by improving the property’s exterior. Shane says that even though an international investor advisor was the seller, he hasn’t seen an increase in international investors in Colorado. “International investors are primarily focused on the coastal markets," he says.
