Cardinal, Capital Solutions Receive Financing for East Denver M-F Community
- Apr 23, 2014
A joint venture between Cardinal Group Investments L.L.C. and Capital Solutions has secured a 12-year fixed-rate loan for financing for Fairways at Lowry, a 450-unit multi-housing community in the Lowry submarket of Denver.
“Even though we own and operate multi-family assets around the country, we are a Denver-based firm and are always looking for opportunities to acquire, improve and reposition real estate in our backyard,” Eric Frank, Cardinal Group Investments’ managing principal, told Commercial Property Executive. “The Fairways at Lowry is in a rapidly gentrifying Denver submarket that we believe offers an opportunity to implement a value-add campaign and to reposition the property as a high-end value option.”
HFF worked on behalf of the partnership to obtain the loan through FNMA. The amount of financing was not revealed at press time.
Located at 9913 E 1st Ave., in east Denver, the Fairways at Lowry is situated on a 14.5-acre site across from the Common Ground Golf Course and is positioned near three redevelopment sites; the decommissioned Lowry Air Force Base, Denver’s Stapleton Airport, as well as the Fitzsimons Life Science District and the Anschutz Medical Campus.
“These three redevelopments are effectuating significant gentrification in the surrounding neighborhoods with increased investment activity, the addition of new amenities, and improving demographics,” Frank said. “We believe this gentrification will likely continue and we are excited to reposition the property in a way that we believe will contribute to the growth and progress of overall community.”
A recent snapshot of the multi-family market in Denver by JLL reveals that the city’s population has grown 3.4 percent since 2010 and approximately 20 percent of the population is between the ages of 25 and 34, a core renter demographic.
The JLL report predicts abundant employment opportunities will continue to support strong population in-migration over the long-term, particularly from the millennial age cohort. This is expected to bode well for apartment demand, particularly as deliveries heat up and excess inventory poses a threat.
Additionally, a report by Downtown Denver Partnership, Inc. shows the Denver apartment market has recovered at a faster rate than the rest of the nation and vacancy rates remain historically low and effective rents continue to climb. In fact, Denver ranks among the top 10 in the country based on annual rent growth.
The joint venture used the money from the loan to acquire the property and will use further funds for capital improvements to the property. The renovation plan includes renovating interiors of all 450 units as well as making landscaping improvements and adding an amenity suite upgrade.
“We believe the property’s overall appeal will also be improved by repainting the building exteriors and by enhancing the existing landscaping and exterior lighting,” Frank concluded. “Finally, we are planning parking improvements and upgrades to other common areas.”
The HFF debt placement team representing the borrower was led by directors Pat Burger and Josh Simon and senior managing director Tim Wright.