Vukota Capital Management Acquires Stratus Apartment Homes in Colorado Springs
02 May, 2016
COLORADO SPRINGS, CO – Vukota Capital Management (VCM) has acquired Stratus Apartment Homes located at 4255 Airport Road in Colorado Springs Colorado for a purchase price of ~$17.4 million. The 216 unit, 2-story garden style apartment complex is currently 96% leased. The buildings are well maintained and feature beautiful rocky mountain landscaping, an outdoor swimming pool, playground, fitness center, resident lounge with Wi-Fi, laundry facilities, picnic area, and courtyards. Significant upgrades have recently been completed which include exterior paint, new clubhouse and pool, and renovated apartment units.
The purchase price is attractive at $17.4 million, 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 >10% greater than current average rents.
The transaction was closed on April 29th, 2016 and brings VCM’s multifamily holdings to 11 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 Freddie Mac.
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.