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New Apt. Complex in Denver's RiNo Sold for $90.6 Million

IRET Properties Buys Property from Developer, Alliance Residential
November 30, 2017
A new apartment complex in Denver's River North area sold to an investor for $90.6 million, marking the second major multifamily trade in that submarket this year.

Dylan RiNo, a 274-unit complex completed last year by Alliance Residential at 3201 Brighton Blvd., sold to Minneapolis-based IRET Properties Inc. (NYSE: IRET) in a "softly marketed" deal this week.

Brokers handling the listing sought companies looking for new deals in Denver, particularly in emerging markets like RiNo, said Terrance Hunt, vice chairman at ARA, A Newmark Company, which represented Alliance along with Shane Ozment and Chris Cowan of ARA Newmark.

Dylan RiNo is located in one of Denver's hottest submarkets but faced the challenge during lease-up of being surrounded by construction, both on other commercial projects nearby and on the Brighton Boulevard improvements currently underway. The property didn't even have a sidewalk in front of it, Hunt said.

Nevertheless, Dylan RiNo was stabilized at the time of sale, at 85% leased and 80% occupied, which Hunt said was a testament to the popularity of the area and continued demand for apartments.

Units at Dylan RiNo range in size from 557 square feet to 1,398 square feet, and fetch rents ranging from $1,480 to $3,135, according to IRET's website. That ranges places starting rents just higher than the market average, which was $1,412 in the third quarter across the metro area, according to data from the Apartment Association of Metro Denver.

The new multifamily property sold for $330,000 per unit, well above the $278,000 per unit price brought by The Crossing at Denargo Market, now called Amli Denargo Market, at 2525 Wewatta Way, which sold to Amli Residential in September for $89 million.

IRET Properties owns multifamily properties throughout the Midwest and has corporate offices in Minneapolis.

"We identified Denver as our next strategic growth market and have been seeking quality, well-located assets in high-demand submarkets," said Grant Campbell, vice president of investments for IRET. "Given Dylan's asset quality and location in the rapidly emerging RiNo submarket, this acquisition is a positive first step in building our metro Denver portfolio."

The buy is part of a new strategy for IRET, Hunt said. The company is trading out of other asset classes and into multifamily because of its strength nationwide.

"They like the asset class, especially in high growth markets with long term viability. They saw an opportunity to get in on the ground floor of an emerging market in Denver," Hunt said.

2017 has been a good year for institutional multifamily sales, Hunt said, although not on par with the record-setting 2016, during which nearly $7 billion worth of apartment complexes traded hands in the metro area.

"Overall, people like Denver and downtown Denver, although it has more units to deliver and absorb," Hunt said. "It's becoming vibrant and has high demand, so it has a bright future."

Please see CoStar COMP #4067690 for more on this transaction.

Molly Armbrister, Denver Market Reporter  CoStar Group   
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