A Denver company with thousands of apartment units across the country paid $35 million, or $301,724 per unit, for its first Boulder asset.
Cardinal Group Investments purchased Uptown Broadway from an affiliate of Los Angeles-based CityView. The transaction included 116 units in 10 buildings at 4590 13th St.
Uptown Broadway also has 32 affordable-housing units in two buildings that were not part of the sale.
“This particular asset was a Boulder-based strategy,” said Jason Kosena, Cardinal Group director of acquisitions. “We believe there is a lot of high-end job creation happening in Boulder that will continue to happen, and we wanted to invest in some of that demographic wave.”
Kosena said the company views Uptown Broadway as a long-term hold. There have been some new apartments delivered in Boulder this year, but growth restrictions in Boulder have kept a lid on new deliveries for 20 to 30 years.
“So, to come into Uptown, with a 2005-built product, is attractive to us because we don’t have to do any types of repairs, renovations or upgrades to it. It’s a beautiful asset as its sits today.
“We’re planning to continue operating it and keep it a clean and nice place to live,” he said.
“It’s a gorgeous asset,” agreed ARA Newmark Vice Chairman Shane Ozment. Consisting of one- and two-bedroom units, the property has 46 townhome-style units plus 18 lofts and 52 flats. Units range from 619 to 1,206 square feet. The property has a clubhouse with a spa and fitness facility, below-grade parking, and a nearby coffee shop and restaurants.
Although most developers satisfy Boulder’s affordable-housing requirement with cash-in-lieu payments, Uptown Broadway’s developers built affordable units on site. Thistle owns and manages those units.
As part of a master-planned community, Uptown Broadway has a homeowner’s association, and there also is a smaller homeowner’s association involving the owner and Thistle, said Ozment, who handled the sale with ARA Newmark Vice Chairman Terrance Hunt. From an investment perspective, “That did make this property a little more difficult because expenses were very high,” he said.
Boulder assets in general can be challenging because prices per unit are high and capitalization rates typically are in the mid-4 percent range, about 50 basis points lower than properties in Denver, according to Ozment.
“What happens in Boulder is yields are quite a bit lower, and cap rates are quite a bit lower as well. We had decent activity, but not double-digit offers, for sure,” he said.
“Historically, our firm has been more of a value-add type of investment shop. With Uptown Broadway, we really were buying more into a market play than an asset play,” said Kosena. In Boulder, he said, “If you buy something today and you own it for 10 years, you’re not going to feel sorry for yourself because you bought it.”
Cardinal Group, which is active in 28 states, owns and manages thousands of student housing and conventional apartment units. It has disposed of its Denver portfolio, most recently with the Fairways at Lowry, as the timeline for those investments reached their end. At the same time, the company is aggressively growing its portfolio and is eager to make additional acquisitions in Colorado, Kosena said.
“We’re based in Denver because we like living here,” he said. “This purchase was nice because it got us back to owning real estate in Colorado again. We are a national shop, and most of our assets that we either own and/or manage are located in other states. When we get to come home and buy and manage here in Denver, it’s always a special treat.”