Vukota Capital Acquires Summer Grove Apartments in Colorado Springs
06 April, 2016
COLORADO SPRINGS, CO – Vukota Capital Management (VCM) has acquired Summer Grove Apartments located at 3802 Half Turn Road in Colorado Springs, Colorado for a purchase price of ~$19.2 million. The 374 unit, 3-story garden style apartment complex is currently 95% leased. The buildings are well maintained and feature two swimming pools, playground, fitness center, laundry facilities, clubhouse, picnic/BBQ area, and dog park. The property is located near Academy Boulevard and Austin Bluffs Parkway, which is one of the most prominent intersections in the city. Residents will also benefit from convenient access to the Chapel Hills Mall, Whole Foods, Sam’s Club and Best Buy.
The purchase price is attractive at ~$51,000 per unit versus in excess of $80,000 per unit for comparable properties, and is at a 40%+ discount to estimated replacement cost, creating a competitive barrier to entry. Further, VCM believes that the acquisition presents a significant value-add opportunity to increase cash flows given that market rents based on recent lease renewals are ~5% greater than current average rents.
The transaction was closed on April 5, 2016 and brings VCM’s multifamily holdings to 9 properties in Colorado.
The transaction was funded by investments of equity capital from VCM and other accredited investors, as well as mortgage financing from Fannie Mae.
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 million to $40 million purchase price.