A sought-after pair of valueadd apartment communities sold to a partnership making its first purchase in Colorado Springs.
The Bascom Group LLC and an affiliate of The Axton Group acquired the Summer Grove Apartments and Tanglewood Apartment Homes. Summer Grove and Tanglewood were built in 1971 and 1972, respectively, and are located at 3802 and 3803 Half Turn Road, near the intersection of North Academy Boulevard and Austin Bluffs Parkway.
Summer Grove, a 374-unit community, sold for $31 million, or $82,887 per unit. The 112-unit Tanglewood sold for $10.15 million, or $90,625 per unit.
“Summer Grove and Tanglewood are two well-located properties with convenient access to strong employment centers, schools and numerous retail and entertainment options,” said Jim Singleton, Bascom’s senior vice president. “The Colorado Springs area continues its healthy growth driven by several ongoing and planned development projects, as well as investments estimated to bring nearly 3,000 jobs to the area. These new developments and the elite quality of life offered by Colorado Springs continue to attract a growing number of young professionals and families relocating to the area.”
“There was a lot of interest in the assets,” said Jake Young of CBRE. “It’s a hot market in Colorado Springs and the properties have a great basis of approximately $85,000, which is a pretty attractive value-add upside.”
Young, with CBRE’s Dan Woodward, David Potarf and Matthew Barnett, represented seller Vukota Capital Management in the sale of the properties.
“The assets at Summer Grove and Tanglewood apartments reflect a unique value proposition and align without investment strategy at Axton, providing excellent in-place cash flow, margin of safety, as reflected by the substantial purchase price discount to sales comparables and replacement cost, and an opportunity to enhance value through the repositioning of the properties via extensive exterior and interior renovations. We look forward to working with The Bascom Group to execute the business plan on this rare acquisition opportunity,” said a spokesman for The Axton Group.
“This submarket has seen very little new construction of multifamily communities over the past several years considering the significant pace of population growth and strong demographic fundamentals. We see this acquisition as an excellent opportunity to complete improvements to these properties while still offering tenants an attractive and affordable place to live,” added Paul Zakhary, senior vice president of portfolio operations for Bascom Group.
Occupancy was stable at the time of sale, around 93 to 94%.
There was a significant amount of interest in the assets, which were offered individually and as a portfolio, said Young.
Brian Eisendrath and Annie Rice at CBRE arranged the debt financing with Don Broderick and Erik Frandsen at TCF Bank.
Vukota Capital Management had purchased both properties in April 2016.