New York real estate firm pays $48.5 million for Colorado Springs apartment complex

April 16, 2014 Updated: April 16, 2014 at 9:11 pm

A New York firm that has bought and sold several Colorado Springs apartment complexes has paid $48.5 million for the 364-unit Bella Springs Apartments on the city's far north side.

The Praedium Group, a privately held real estate investment trust, bought the complex from an investment group led by Springs-based real estate company Griffis/Blessing Inc., which had owned the property since 2006.

The 13-year-old complex is at 1050 Milano Point, southeast of North Gate Boulevard and Voyager Parkway.

The purchase price translates to $133,242 per unit, short of a record set last year when a California firm paid $54 million, or $163,000 per unit, for the Alexan at Briargate complex.

Nevertheless, Praedium's purchase shows the local multifamily market remains strong, at least in the eyes of investors.

The area's apartment vacancy rate was 7.1 percent in the fourth quarter of last year, according to the Colorado Division of Housing. Average rents, meanwhile, have increased for 16 straight quarters - making apartment properties attractive to buyers.

David Dowell, Praedium Group director, couldn't be reached for comment. In a news release, he said Praedium had invested several times in the local market over 15 years. Praedium Group bought the property "at an attractive price" after another buyer failed to complete a deal, Dowell said.

Praedium notes that the property is near higher-income areas and is close to Interstate 25, FedEx, Progressive Insurance and other major employers.

"We believe that the asset (Bella Springs) will benefit from the favorable supply and demand dynamics in the market," he said. The Springs is expected to see rent increases above the national average over the next five years, Dowell said, quoting data from a national apartment research firm.

Gary Winegar, Griffis/Blessing's chief investment officer, said the investment group planned to sell Bella Springs seven years after buying it.

Since 2006, the owners spent $3,000 to $5,000 per unit to upgrade 25 percent of the apartments at Bella Springs, Winegar said. At the same time, rents were raised on those apartments - and renters showed they were willing to pay them, he said.

That strategy demonstrated the potential value of the property for a buyer who'd come along later and do the same thing, Winegar said.

"I think they (Praedium Group) perceive it as being a market they want to be in," Winegar said. "They believe, and we do, too, that the multifamily market is going to do well in Colorado Springs in the future."

Among other Springs-area deals, Praedium and a partner sold the 240-unit Preserve at Hidden Creek complex to a Griffis/Blessing group in 2011; Praedium had purchased it five years earlier. In 2005, Praedium bought the 276-unit Retreat at Cheyenne Mountain.

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