840 Cherry: Denver Apartment Building Sale (Hale Neighborhood)

The Denver Apartment Buildings For Sale website announces that Kyle Malnati and Greg Johnson of Madison & Company Properties brokered the sale of a 17-unit apartment building, called “Melrose Place,” to a Buyer in a 1031 Exchange. This apartment building is located just a half-block south of Rose Medical Center in the Hale/Mayfair neighborhood at 840 Cherry Street, Denver, CO 80220.

This real estate transaction has multiple story-lines:
– navigating a 1031 Exchange timeline
– off-market deal between repeat clients of Kyle Malnati and Greg Johnson
– hot multifamily sales market in Central Denver
– dramatic improvement of the Hale/Mayfair neighborhood

We have been fortunate to have served several repeat clients during our career. This might not sound like a big deal in some businesses, but multifamily acquisitions aren’t a frequent experience for most private investors. In the case of 840 Cherry Street, the Seller and the Buyer both happened to be repeat clients of ours. That type of familiarity can be productive, but familiarity can also breed contempt if you’re not careful. Real estate transactions are complicated, and tax deferred 1031 Exchanges can be especially stressful due to the anxiety associated with the Buyer’s search for a replacement property with a 45-day deadline looming.

The Buyer is a local investor that lives in Denver and was a client relationship of Kyle’s that started back in 2010. Kyle sold a 13-unit apartment building in December 2010, and through their first 1031 Exchange, helped this client buy a 34-unit multifamily complex in East Denver that was “rough around the edges” in March 2011. Kyle and Greg closed the sale of that 34-unit, Lowry Pines, earlier this year in January 2015, and the 1031 Exchange clock started ticking again…

The Buyer started searching for replacement properties in January/February of this year and actually had another deal under contract that failed its inspection. It was back to the drawing board. Kyle and Greg made a call to the owner, another past client, and negotiated the sale of Melrose Place off-the-market by submitting an Offer directly to the Seller.

This sale is another example of a hot Central Denver multifamily sales environment. The Seller had only owned the property for one year and was able to make a large profit (over a $700,000 gain) in a short amount of time. The sale also demonstrates the rise in value of apartment buildings located East of 8th Avenue and Colorado Boulevard. 840 Cherry has sold several times over the past 10-years which provides us with an interesting perspective on long-term values:
– 05/28/2015: $2,400,000 ($141,176/unit)
– 04/10/2014: $1,606,500 ($94,500/unit)
– 11/16/2010: $925,000 ($54,412/unit)
– 05/23/2005: $1,075,000 ($63,235/unit)
– 04/27/2004: $1,025,000 ($60,294/unit)

There are a number of factors driving demand for apartment buildings East of Colorado Boulevard on the 8th Avenue corridor:
1. CU Medical Center moving out of the neighborhood and finally being redeveloped
2. Quality 3rd party multifamily management by Wheelhouse Apartments (http://www.wheelhouseapts.com/)
3. Development of Trader Joe’s grocery and liquor store at 8th/Colorado
4. Snooze, an AM eatery at 7th/Colorado (http://snoozeeatery.com/)
5. Strength of Rose Medical Center which is known as a newborn delivery hub (aka “Denver’s baby factory”)
6. RedPeak’s acquisition of the Moana apartment portfolio (http://www.redpeak.com/apartments/825-dahlia/)

We have provided detailed statistics regarding this sale below:
BUILDING NAME: Melrose Place
ADDRESS: 840 Cherry Street, Denver, CO 80220
SALE PRICE: $2,400,000
SALE DATE: 5/28/2015
PRICE/UNIT: $141,176
PRICE/SF: $268.19
CAP RATE: 4.76% (actual)
LOT SIZE: 6,350* SF
PARKING: 11 spaces
# OF UNITS: 17
UNIT MIX: 12-1Br/1Ba, 5-1Br/1Ba (large/corner)
DENVER COUNTY LINK: http://www.denvergov.org/Property/realproperty/summary/161761051/
*Reader to verify accuracy of square footage*

Special thanks to our friends and colleagues:
Brianna Corwin, Nichole Segura, and Laurel Rossi at Stewart Title

For more information about this apartment building sale in Denver’s Hale – Mayfair neighborhood or other Colorado commercial real estate transactions, please contact:

Kyle Malnati and Greg Johnson
Madison & Company Properties
Madison Commercial Properties

About: Madison Commercial Properties is a Denver-based commercial real estate firm specializing in apartment brokerage and investment sales in central Denver. Managed by Kyle Malnati and Greg Johnson, Madison Commercial Properties is a division of Madison & Co. Properties. For more information, please visit: http://www.DenverApartmentBuildingsForSale.com or http://www.madisonprops.com.

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Madison Commercial Properties, Ltd. 1221 S. Clarkson Street, Denver, CO 80210 (303) 771-3850