450-unit Colorado property heads to servicing

Dive Brief:

• The Fairways at Lowry, a 450-unit workforce condominium property in Aurora, Colorado, was transferred to particular servicing after its proprietor did not make August and September funds. The property had a $52.4 million floating-rate mortgage from Freddie Mac, in keeping with a Morningstar Credit report shared with Multifamily Dive.
• The asset was purchased by San Diego-area Tower 16 Capital Partners along with New York City-based Dune Real Estate Partners in November 2020 for $68.5 million, according to a news release and local property records. Tower 16 didn’t reply to Multifamily Dive’s request for remark.
• The Fairways at Lowry was Tower 16’s first buy in Denver, although the corporate deliberate to accumulate a portfolio of two,000 models over the subsequent 18 months. It presently has no Denver-area properties listed on its web site, though it has numerous property in Las Vegas, Phoenix and the Inland Empire within the higher Los Angeles space.

Dive Insight:

The Fairways at Lowry sits simply minutes away from the Lowry master-planned growth and eating, procuring and recreation facilities, in keeping with Tower 16’s press launch. In addition, the property is 3 miles from Interstate 225 and seven miles from downtown Denver. 

At the time it bought the property, Tower deliberate $6.8 million in renovations, together with modernized condominium unit upgrades, a brand new clubhouse, a gymnasium and an up to date pool space. The firm additionally meant so as to add out of doors facilities, together with barbeques, seating, out of doors gaming and a sports activities court docket.

There was no replace on these upgrades within the Morningstar report. However, the borrower went by “a fairly aggressive eviction process early in 2024 in an attempt to elevate the level of tenancy,” which resulted in decrease occupancy and better turnover bills, in keeping with Morningstar. 

Insurance bills had risen 68% from the underwritten determine, in keeping with Morningstar. As financing and different prices have risen, rents within the Denver space have fallen because of the excessive provide of residences. 

In its most up-to-date Vacancy & Rent Report for July, the Apartment Association of Metro Denver reported that common rents had decreased by 3.7% year over year. Rental charges had been down $71 because the second quarter of 2024 and $46 decrease than the identical interval in 2023.

For house owners who had deliberate in depth property enhancements to seize elevated hire, the market trajectory is dangerous information.

“For three consecutive quarters now, we have seen rents lower than they were at the same time the year before,” Mark Williams, AAMD government vp, mentioned in a information launch. “We are starting to see a trend here. Average rent continues to stay relatively flat the past three years.”

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