Oak Coast invests in Colorado Springs with Cottonwood buy

Oak Coast Properties continues to add to its Colorado portfolio with its purchase of Cottonwood Terrace.

The Southern California based investment firm paid $37.25 million for the 200-unit community at 2864 Dublin Blvd. – its first Colorado Springs community – where it is planning a $1.5 million renovation to the property as part of a value-add investment strategy aimed at improving the marketability of the apartment units among the region’s renters.

“Our portfolio continues to perform and beat expectations, even with COVID-19 as a backdrop,” said Phil Nahas, managing partner of Oak Coast Properties. “Thus we are comfortable continuing to acquire quality multifamily properties like Cottonwood Terrace.”

The garden-style community comprises 20 two- and three-story buildings on a 8.27-acre site.

Cottonwood Terrace features one- and two-bedroom units averaging 819 square feet with large, open kitchens, balconies, patios, large closets, as well as wood burning fireplaces and views of Pikes Peak in some units. Originally built in 1983, 52% of Cottonwood Terrace’s units have undergone upgrades.

Oak Coast Properties plans to improve the balance of the community’s units – still in original condition – with enhancements to appliances, countertops, cabinets, lighting, flooring and inunit washers and dryers, for example.

“In recent years, Colorado Springs has consistently ranked among the top cities drawing large droves of millennials,” added Nahas. “As a key cohort in the apartment living sector, these individuals are seeking quality housing options. While a highly desirable community already, Cottonwood Terrace will be even more attractive to these renters when our renovation efforts are complete.”

Cottonwood Terrace also features a swimming pool, grilling stations, new fitness center and state-of-the-art laundry facility. The amenities, noted Oak Coast, also represent an opportunity for upgrades.

Additionally, Cottonwood Terrace is situated amidst a diversified employment base, is proximate to retail, including Chapel Hills Mall and Academy Boulevard, and is near the U.S. Olympic Training Facility, Garden of the Gods, U.S. Air Force Academy, Pikes Peak, The Broadmoor and Manitou Springs.

Peak Capital sold Cottonwood Terrace, which was 96% leased and 93% occupied at the time of sale.

JLL’s Capital Markets team representing the seller was led by Managing Director Jordan Robbins and Directors Mack Nelson and Chris White.

“Cottonwood Terrace is a great investment opportunity with a historically strong performance,” said Robbins. “It is a tremendous value-add property with plenty of room for renovations to continue increasing the value of the community.”

“Colorado Springs continues to be sought after by a growing amount of capital,” added Nelson. “The sales process was competitive, resulting in strong pricing and excellent execution by Oak Coast, even during the global pandemic.”

Echelon Property Group will manage the community.

JLL also worked on behalf of Oak Coast Properties to secure a $28.5 million, 12-year, fixed rate loan through Freddie Mac. Financing was led by Senior Managing Director Charles Halladay, Senior Director Brock Yaffe and Director Rick Salinas. Agency/government-sponsored enterprise lending and loan servicing are performed by JLL Real Estate Capital LLC, a wholly owned indirect subsidiary of JLL Inc.

With the purchase of Cottonwood Terrace, Oak Coast Properties’ portfolio exceeds 5,129 units under management with more than $1 billion in valuation. The majority of its portfolio is located in the metro Denver area. It specializes in investing in Class B and C multifamily communities, where it can implement a value-add investment strategy.

Featured in the August 19-September 1, 2020, issue of CREJ