A Florida company that acquires and manages apartment communities has boosted its Colorado Springs investment to more than $100 million after buying its third apartment complex — another sign of investor interest in the city’s red-hot multifamily market.
Priderock Capital Partners of West Palm Beach paid $35 million this month for the 220-unit Union Heights Apartments, southwest of Academy and Union boulevards on the city’s north side, El Paso County land records show.
The deal follows Priderock’s $47 million purchase in November of the 240-unit Preserve at Hidden Creek Apartments and its $22.6 million acquisition in 2014 of the Ironwood at Palmer Park Apartments, both on the north side, according to land records.
Priderock’s three acquisitions total $104.6 million.
Priderock officials didn’t return phone calls.
Priderock purchased Union Heights from Griffis/Blessing, the Colorado Springs-based real estate company that teams with a network of investors to buy multifamily properties, upgrade them and sell them for a profit after several years. Griffis/Blessing also manages thousands of Front Range apartments along with commercial properties.
Griffis/Blessing bought Union Heights for $22 million in 2015, land records show. It spent $2.3 million to improve the property’s clubhouse, fitness area, pool and parking lot, said Gary Winegar, Griffis/Blessing’s president of investment services. Building exteriors were painted, while apartments received new appliances and upgraded lighting and carpeting, he said.
Those types of improvements allow Griffis/Blessing to command higher rents, which make the properties attractive to buyers.
Griffis/Blessing typically holds properties for five to seven years, but sold Union Heights after just three years. After making improvements and increasing rents, Union Heights’ occupancy levels remained high, Winegar said. With a good offer on the table, Griffis/Blessing decided to sell.
“We had increased value by quite a bit and felt it was time to go ahead and realize that gain for our investors,” Winegar said.
Priderock is among several out-of-town and out-of-state investors that have purchased apartment properties in Colorado Springs in recent years because of a surging multifamily market.
Demand for apartments has increased as the economy has improved and the city’s unemployment rate has dropped, while the supply of new apartments hasn’t necessarily kept pace, some apartment experts have said.
Average rents jumped to nearly $1,157 a month in the second quarter, the latest in a series of record highs, according to the Colorado Division of Housing. Vacancy rates also have remained in the low to mid-single digits; the second-quarter rate was 6.3 percent.
Jake Young, a vice president in the Denver office of national real estate firm CBRE, which represented Griffis/Blessing in its sale, said Colorado Springs’ multifamily market continues to attract investors because of its economy and growth.
Investors who already have pored over the Denver market now are looking south to the Springs where they’re finding steady rent increases and lower sale prices, said Young, who was joined by colleagues Dan Woodward, David Potarf and Matthew Barnett in representing Griffis/ Blessing.
“You’ve got better rent-growth metrics and a tighter supply-demand metric, in terms of less new supply coming on line and very strong demand that continues to drive rents,” Young said. “So, investors from out of state are looking for yield, and this is a good place for them to invest.”