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Oak Coast buys Aurora Hills for $96M

Oak Coast Properties picked up its seventh metro Denver acquisition.

Oak Coast Properties picked up its seventh metro Denver acquisition – boosting its local portfolio to more than 3,000 units – with its purchase of Aurora Hills Apartments.

The Los Angeles-based developer, owner and manager of multifamily and hotel properties paid $96 million for the 600-unit property at 11850 E. Maple Ave. in Aurora – its fourth property in the Aurora submarket.

“With the purchase of Aurora Hills Apartments, our regional portfolio has now reached 3,600 apartment units in the Denver region alone,” said Phillip Nahas, Oak Coast Properties’ managing partner. “Population growth here is surging as employment opportunities expand and overall quality of life factors remain highly appealing to many.

“This area benefits from incredible employment opportunities, however, those opportunities are drawing a number of people to the region, which continues to amplify pressure on regional housing stock,” he added. “There is a clear need for better apartment options and we have sought to help alleviate some of this demand by acquiring quality communities and making improvements to them.”

Built in three phases between 1970 and 1974, Aurora Hills recently underwent a renovation to a number of its units. However, Oak Coast Properties is planning an additional $2.5 million in upgrades, which will include exterior repairs, roof maintenance and moisture protection, amenity improvements and additional work on mechanical, electrical and plumbing systems.

“We do have some deferred maintenance to take care of due to the ‘70s vintage but we also want to add amenities and spruce up its curb appeal,” Roy Kim, a principal at Oak Coast, said of the planned improvements to the Aurora Hills property, which sits on 48 acres and comprises 47 rental buildings.

“There is still some value-add left to do and upside in rents as in-place rents are $1,128 compared with market rents of $1,216,” explained Dan Woodward of CBRE, who represented the seller with CBRE’s David Potarf, Matt Barnett, Brady O’Donnell and Brian Eisendrath.

Indeed, Oak Coast does plan to raise rents to market levels at Aurora Hills – a community that has an average unit size 300 sf bigger than the competition – and also build on economies of scale in the submarket, where it owns approximately 2,400 units.

Aurora Hills features one-, two- and three-bedroom units with an average unit size of 1,022 sf. At the time of sale, the community was 94.8 percent occupied.

Apartments feature brushed nickel lighting fixtures, central heat and air, a dishwasher and trash disposal. A large number of units also include one or more of the following: new countertops, a private balcony or patio, stainless steel appliances, walk-in closets, wood-style flooring and updated cabinets.

Community amenities include an on-site fitness center, heated outdoor swimming pool, picnic areas with grill stations, a splash park, basketball court, soccer field with artificial turf and volleyball court.

The property is located near the intersection of Alameda Avenue and Peoria Street, adjacent to the Highline Park and Ballfields and the Aurora Hills Golf Course. It also has easy access to Denver International Airport and downtown Denver via light rail and is near Fitzsimons, Lowry and all the redevelopment happening in the market.

Pensam Residential of Miami provided equity financing for the acquisition. Brock Yaffe, Charles Halladay and Lee Redmond of Holliday Fenoglio Fowler LP’s debt placement team assisted in securing a $76.7 million supplemental loan for the buyer through Freddie Mac’s CME Program. The securitized loan will be serviced by HFF, a Freddie Mac Multifamily Approved seller/servicer for conventional loans.

BLDG Management, the property management company affiliated with BMC Investments, will manage the Aurora Hills Apartments. The firm also manages additional Oak Coast communities in the region.

Oak Coast Properties, which pursues Class B and C multifamily properties for the implementation of a value-add, long-term hold investment strategy, is looking to acquire additional Colorado assets as well as properties across the Eastern Seaboard, Pacific Northwest and Western U.S.

Featured in CREJ’s January 3-16, 2018, issue