Marcus & Millichap Capital Arranges $30M Loan for Denver Apartment Complex

A $30.6 million non-recourse loan arranged by Marcus & Millichap Capital Corp. helped Security Properties Inc. of Seattle re-enter the Denver market with the $37 million purchase of The Aventine, a 336-unit apartment complex.Jake Roberts and Anita Paryani, senior directors in Marcus & Millichap Capital’s West Los Angeles office, arranged the financing package for The Aventine, located at 3257 S. Parker Road in Aurora, Colo.“The lender provided a commitment to the borrower within two weeks of receiving the signed application for the non-recourse loan,” Roberts said in a company release.Financing was provided by an unidentified bridge lender at a floating interest rate of LIBOR plus 225 basis points, according to the release. The interest-only loan has an LTV of 71 percent.Barrett Sigmund, director of Northwest acquisitions for Securities Properties Inc. (SPI), told CPN today the firm bought the property from Dermot Cos. Built in 1980, the property has four, seven-story buildings on nearly nine acres. There is 341,000 square feet of rentable space. The property, which has 96 percent occupancy, has eight studios, 108 one-bedroom and one-bathroom units and 220 two-bedroom and two-bathroom apartments. Average rents range from $632 for a studio to $1,050 for the two-bedroom, two-bathroom units. SPI plans to spend about $10,000 per unit on major interior renovations, adding new floors and countertops, painting and replacing appliances, Sigmund said. The company is also making exterior improvements and adding a dog park on the site of one of four tennis courts. The property also has indoor and outdoor pools, a fitness center and 562 parking spaces. .“This acquisition marks SPI’s re-entry into the Denver market. We believe in the market fundamentals and will continue to acquire more assets that fit our value-add strategy,” Sigmund said. He noted that the firm owns two HUD-subsidized properties in the Denver area with a total of 600 units but The Aventine is the first market-rate apartment complex SPI has had in the region in a decade. He said he has been looking in the Denver area for two years for the right value-add property and plans to continue seeking more investment opportunities. Citing data from the Metro Denver Economic Development Corp., the firm noted that Denver ranks fifth among the 30 largest metro areas for projected growth income from 2003 through 2008. The Aventine is located near the Denver Tech Center and within walking distance of the Nine Mile Light Rail Station. Statistics from the Colorado Department of Local Affairs noted that multi-family vacancy rates in the Denver region have been dropping. Vacancy rates for the third quarter of 2007, the most recent data available, were 5.3 percent, down from 6.1 percent in the second quarter of 2007 and from 7.2 percent at the beginning of 2007.Other recent multi-family acquisitions made by SPI include the purchase of the MuniMae portfolio in the Seattle area for $57.5 million in December 2007. Three garden-style complexes in Everett, Issaquah and Fife, all densely-populated submarkets of Seattle, were acquired in that transaction.