Vukota Capital Management Acquires Tanglewood Apartments in Colorado Springs
28 April, 2016
COLORADO SPRINGS, CO – Vukota Capital Management (VCM) has acquired Tanglewood Apartments located at 3803 Half Turn Road in Colorado Springs, Colorado for a purchase price of $7.8 million. The 112 unit, 3-story garden style apartment complex is currently 97% leased. The buildings are well maintained and feature a swimming pool, clubhouse, picnic/BBQ area, laundry facilities, lounge with games room, fitness center, and spa/jacuzzi. 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 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 ~7.5% greater than current average rents.
The transaction was closed on April 22, 2016 and brings VCM’s multifamily holdings to 10 properties in Colorado. Currently, VCM and it’s subsidiaries own/manage 2,500+ apartment units.
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 500 units, or $5 million to $50 million purchase price.