All the good value-add opportunities in Denver multifamily haven't been taken, Oak Coast Properties managing partner Phillip Nahas tells us. You just have to know where to look.
LA-based Oak Coast and locally based BMC Investments acquired the 434-unit Artisan Townhomes and Apartments in the Southeast submarket of Denver recently for nearly $51M, and they're planning a $2.5M renovation and repositioning. "We're still finding value-add opportunities in Denver," Phillip says. Pricing has gotten competitive, but with new Class-A product entering the market and no new lower-tier inventory, there are opportunities to buy B and C assets in strong submarkets throughout Denver.
The assets that offer the best value-add possibilities are typically 1980s vintage, and are prime for reinvestment to address deferred maintenance, as well as to refresh the amenities and unit interiors, adds Phillip—renters expect more these days. But they don't always want to pay new-property rents, and the repositioned properties can offer a more affordable lease rate.
The Southeast submarket is among the strongest in metro Denver with average annual rent growth exceeding 10% since 2012, Phillip notes, and access to the I-225 Light Rail Line. Despite this growth, lack of new supply exists: There are only two new properties within a three-mile radius of the Artisan Townhomes. “Our renovation plan will allow us to bring rents to a higher market rate and drive return on investment,” he explains.
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