- RedPeak is based in Denver.
- RedPeak buys a trio of Capitol Hill apartment buildings.
- RedPeak is looking for other infill apartment buildings.
Combined, the buildings have a total of 66 units.
That equates to $209,850 per unit and $413 per rentable square foot.
The properties are the 43-unit Stanley at 929 Marion St., the 17-unit Bierstadt at 1145 Ogden St. and the six-unit Crestone at 1153 Ogden St.
RedPeak paid $7.475 million for the Stanley and $6.375 million for the Bierstadt and the Crestone.
Records indicate the Marion property had been purchased in 2012 by the seller for $4.8 million. The two Ogden Street buildings had been purchased for $900,000 each in 2011, according to public records. In other words, RedPeak paid more than double the $6.6 million the sellers had paid.
However, the price the seller, Mountain Pacific II LLC, paid to purchase the proerties doesn’t begin to tell the story of the buildings, said Andy Hellman, who was part of the ARA Newmark apartment brokerage team that listed and sold the portfolio. The Crestone was recently constructed and all three buildings were in mint condition, Hellman,
“This deal had a lot of moving pieces,” said Hellman, who was part of the ARA Newmark team that also included Justin Hunt, Robert Bratley and Kevin Jewett.
The sellers included a “high-end” homebuilder that razed a dilapidated mansion and replaced it with the new, first-class Bierstadt. The other two buildings underwent extensive renovations, he said.
“The Crestone was built in the late 1800s and was taken down the original brick and studs and as gutted,” Hellman said. “I’d hesitate to even call it a renovation. It was a true construction project. And it is beautiful.”
The Stanley, originally built in 1955, also underwent an extensive renovation in 2013.
“The Stanley already had wide hallways and high ceilings,” Hellman said. The renovation included adding oak floors, granite countertops, dishwashers in units, walk-in closets, crown moulding, wood blinds, ceiling fans and thermostats in each units.
The renovation also included a new roof, evaporative cooling, a high-effiency boiler, and Anderson low-e, double-paned windows. The electrical system also was upgraded.
“These strategic and seamless acquisitions bring RedPeak’s ‘Urban Living Portfolio’ to 730 units in 17 buildings in Denver’s most walkable neighborhoods, and our total Colorado portfolio now consists of 2,445 units,” said Bobby Hutchinson, RedPeak’s investment director.
“In addition, we have recently broken ground on an eight-story, 115 unit apartment building located at (East 7th Avenue and Sherman Street) in the Governors Park neighborhood, which we expect to deliver next summer, and have recently completed a substantial renovation of a 32 unit historic property at 970 Pennsylvania St,” he continued.
“We continue to look to expand upon our growing presence in Denver’s highly desirable urban neighborhoods,” Hutchinson said. Capitol Hill had a 5.4 percent vacancy rate in the first quarter, according to the Apartment Association of Metro Denver. That is the higher than the overall metro vacancy rate of 4.9 percent.
However, once again, that doesn’t tell the story of the Capitol Hill market, Hellman said.
“In Capitol Hill, that includes new, big buildings that are just coming on the market and in the lease-up stage,” Hellman said. “Buildings with 100 to 199 units had a 13.4 percent vacancy rate in the first quarter. But the vacancy rate for those building was about 20 percent in the fourth quarter, so the vacancy rate already has dropped substantially in just one quarter. And if you look at buildings with 30-units or less the vacancy rate was 2.7 percent in the first quarter.”
He said there was huge demand for the buildings. Some buyers wanted to buy all of them and some just wanted to buy the Stanley and some wanted to buy the Bierstadt and the Crestone.
“We never really thought of splitting the Bierstadt and the Crestone,” which are next to each other, Hellman said.
In addition, to the quality of the buildings, Capitol Hill is “red hot,” Hellman said.
“Honestly, there is more investor interest in Capitol Hill than we have ever seen,” Hellman said. “The problem is that there is just very much available to buy.”
Millennials, who can’t afford to live in new buildings downtown, are drawn to the less expensive Capitol Hill, with its mix of new and old buildings, as well as trendy restaurants and hrs, he said.
RedPeak paid at the top of the market, but the buildings are worth it, he said.
“The moral of the story is that it is hard to overpay for great buildings in a great location like this, especially for a long-term owner like RedPeak,” Hellman said.
RedPeak, he said, was the perfect buyer.
“This is RedPeak’s bread and butter to buy these type of high-class buildings that really will withstand the test of time,” Hellman said.
RedPeak is actively seeking high quality apartment buildings in central Denver. It is willing to pay top market prices for assets that fit the company’s target criteria.
RedPeak’s other recent purchases include:
- The Coachman Apartments, 1075 Corona St.;
- 880 and 890 Dexter St.;
- 820 Dexter St.;
- 825 Dahlia St.;
- 805 Dahlia St.;
- And 70 Clarkson St.
Interested in buying a home in Capitol Hill? Please visit COhomefinder.com.
Have a story idea or real estate tip? Contact John Rebchook at JRCHOOK@gmail.com. InsideRealEstateNews.com is sponsored by 8z Real Estate. To read more articles by John Rebchook, subscribe to the Colorado Real Estate Journal.