Vukota Capital Acquires Elm Grove Apartments in Aurora, Colorado
05 June, 2015
Denver, CO – Vukota Capital Management (VCM) has acquired Elm Grove Apartments located at 11852 East 16th Avenue in Aurora, Colorado for a total purchase price of $3.4 million. The 59 unit 3-story garden style walk-up apartment building located within the vicinity of one of the largest medical campuses in the United States, just blocks from the Fitzsimons Life Sciences District and the Fitzsimons Light Rail Station.
The property is located across the street from an existing building VCM owns and manages (Fitzsimons Place). The purchase price is attractive at ~$57,000 per unit, which is ~20% less than similar priced un-renovated comparable properties in the area, and is estimated to be ~40% discount to replacement cost, creating a competitive barrier to entry. Further, VCM believes that the acquisition presents a significant value-add opportunity to increase cash flows by migrating to market rents over the next 2 years as current in-place rents are on average ~6.0% below market.
The transaction was closed on June 2, 2015 and brings VCM’s multifamily holdings to 4 properties in Colorado.
The transaction is funded by investments of equity capital from VCM and other accredited investors, as well as $2.5 in mortgage financing from Guaranty Bank.
VCM multi-family strategy is to acquire properties in secondary and tertiary markets below replacement cost in growing supply constrained communities where, over the long-term, rents are expected to increase above the rate of inflation. Key value drivers that VCM considers are the number of jobs created relative to unit supply, and the spread between cap rates and borrowing costs. VCM’s typical property acquisitions range between 100 and 400 units, or $5.0 million to $35.0 million purchase price.