Getting your player ready...
CB Richard Ellis today confirmed it has been retained to sell the Carmel Cos. apartment portfolio in Colorado, which it describes as the “largest multifamily offering in the nation.”
The sale was first reported by InsideRealEstateNews on Wednesday.
CBRE is the exclusive adviser regarding the sale of the portfolio, which it said consists of more than 8,000 units in 24 properties developed between 1980 and 2000.
Zeff built apartment empire
Carmel Cos. was started by the late Kal Zeff, who built the largest empire of apartment units in the Denver area. Zeff died in 2005 and is survived by four children that are selling the apartment portfolio, according to sources.
CBRE’s Multi-Housing Group was retained the board of directors of the family owned Carmel Cos.
Team leaders include Dan Woodward in Denver and Tyler Anderson in Phoenix. Additional members of the marketing team include Sean Cunningham and Asher Gunter in Phoenix and David Potarf and Jordan Robbins in Denver. This group has been assigned to market and sell the entire portfolio, either as a bulk purchase or on an individual one-off basis.
“The Carmel Companies portfolio presents a tremendous opportunity to purchase multifamily assets within the Denver market in preparation for the substantial increase in rental rates we expect to see over the next five years,” Anderson said in a statement.
Added Woodward: “This represents a unique one-time opportunity for a new buyer to acquire a number of well-located, high quality, family-owned assets with tremendous value-add potential.”
Marketing will commence in early June, with offers being taken in early July.
Bidding war possible
CBRE did not publicly address the potential price of the sale, which is typical. But one competitor said he thought it could sell for around $800 million. Other observers, however, believe that valuation is too low. “It could go for north of $900 million,” said one person familiar with the portfolio. He said he thinks there could imagine bidding wars erupting. “I would think so,” he said. “Everyone wants to be in Denver.”
One official said he believes a bulk purchase would not fetch the highest price.
“It would probably sell for less if they sold it as one package, because the investor would demand a higher rate of return,” said one apartment expert. “They would probably make more if they sold them on a one-off basis to more entrepreneurial investors that could see a value-added opportunity for specific properties, but that would obviously take longer. The path of least resistance is to sell most of them in big blocks, but we shall see.”
He described the portfolio as being “well-managed, well-kept up. It is a really solid portfolio.”
However, he said that the properties have an “inventory of different products across a wide-stretch of time,” and the most favored buildings that demand the highest prices have been developed in recent years. “However, it is a great time to sell apartments. Interest rates are low and occupancies are high.”
He said that a real estate investment trust, or a REIT, probably would not be a likely buyer, as they don’t like the expenses of maintaining and operating older properties. “A lot of REITs have disposed of their older products,” he said. “But it’s possible that it could be very attractive to private equity groups or syndicators that would either want to create an apartment REIT or get a major foothold in a strong, growing market in one fell swoop. Deals like this don’t come along very often, so it could attract buyers you wouldn’t normally think of as buying multifamily products.”
Gordon Von Stroh, a University of Denver business professor and an expert on apartments, said that this truly is a once-in-a-lifetime opportunity.
“It’s a well-managed, well-built portfolio by a respected developer,” Von Stroh said. “Opportunities like this seldom come along. I would expect there will be a lot of interest from investors in this portfolio.”
Contact John Rebchook at JRCHOOK@gmail.com
