Castle Lanterra began looking to make its first apartment community acquisition in Denver in midyear 2016.
The private real estate investment firm kicked the tires on three to six apartment communities before buying the 369-unit Alexan Sloan’s Lake late last year.
The price of admission to the Denver market was $100 million – or $102.8 million, which equates to $278,591 per unit, to be exact.
The acquisition by Castle Lanterra, based outside of New York City, not only marks its first purchase in Denver but also the farthest West it has gone so far geographically.
Since it was founded in 2009, the firm’s $1.5 billion-plus portfolio has grown to about 8,300 units, with a concentration of properties in Texas.
I asked apartment veteran Jim Brady, vice president of property management and operations for Castle Lanterra, what he likes about Denver.
“What’s not to like about Denver?” he responded rhetorically.
Then, it was off to the races.
“Obviously, Denver clearly is experiencing growth,” Brady said.
“Large companies in the area are expanding. The city, we know, everybody knows, provides a steady stream of millennials moving there.”
Denver is growing so fast that he isn’t too concerned about overbuilding.
“Even given the fact of the expansion of the (apartment) inventory, when you look at the growth, it is still looking pretty good in Denver,” he said.
Drilling down to the Alexan Sloan’s Lake, which Castle Lanterra has renamed as Regatta Sloan’s Lake, Brady enthusiasm escalated.
“When we look across the city, we have a lot of confidence in Sloan’s Lake. This is not an area where things are scheduled to happen, but where things are actually happening right now,” Brady exclaimed.
The apartment community is one of the first major communities to open in the master-planned development of the former St. Anthony Hospital campus.
The site, across from Sloan’s Lake, the largest lake in Denver, is called Sloans.
Coming attractions to Sloan include an Alamo Drafthouse Cinema movie house, retail, offices, townhomes and a 12-story condo tower.
“The geography is perfect and the proximity to the beautiful lake that allows boating and recreational opportunities, the movie house, the retail that is there and on its way … I want to move there myself,” said Brady, who lives outside of Philadelphia and travels to Denver every six weeks or so.
“They are building a little microcity there where people are going to want to live, and congregate and hang out,” he continued.
“Honestly, if you live (in Regatta Sloan’s Lake) you would never need to travel more than four blocks and you could find just about anything you want. It’s all going to be there, whether you want to go to a coffeehouse or a restaurant or catch a movie.”
And with a light-rail station within an easy walk from Sloans, you don’t even need a car, he added.
He also liked that it was developed by Trammell Crow Residential, a company he worked for earlier in his career.
“Trammell Crow Residential is a very strong builder with a great reputation,” Brady said.
Trammell Crow Residential installed a high-technology system in the community, which opened in late 2015.
“What we are doing is optimizing the system to use all of the data to its fullest potential,” Brady said.
For example, the community has a comfortable, well-equipped office center.
“We know some people work from home but might not always want to work from their apartment,” Brady said. “So we’ve made it easy if a resident wants to reserve space in the office center on a Tuesday morning, for example.”
Castle Lanterra beat out 10 or 12 other companies that bid for the community, according to Terrance Hunt.
Hunt, along with fellow ARA Newmark brokers Jeff Hawks, Doug Andrews, Shane Ozment and Chris Cowan, listed the property and represented Trammell Crow Residential in the sale.
“They really are getting in on the ground floor of one of Denver’s hottest, up-and-coming neighborhoods,” Hunt said.
Castle Lanterra is looking to make other acquisitions in Denver and in nearby suburbs.
“We typically are a suburban buyer,” Brady said.
“Now, I know some people will argue that Sloan’s is not a suburban product, but an urban development, but we think it is kind of the best of suburban and urban,” he said.
It typically wants to buy communities with 300 to 500 units.
“We’re not afraid to buy new, but our portfolio probably is weighted a bit more to the older, value-add product,” Brady said.
“So we will go down both paths: new product and value-add opportunities.”
Brady noted that his best friend growing up now lives in Denver.
In a rare confluence, business and personal reasons for wanting to move and invest in Denver are in alignment.
“When you look at the reason why so many companies are attracted to Denver and why so many people are attracted to Denver, it is interesting that the business reasons and the personal reasons are very much aligned.”