Denver firm buys Blue River Apartments in Silverthorne for $9.2 million
April 3, 2015
An affordable housing complex on the northern edge of Silverthorne recently sold for twice its assessed value, making it the largest real estate transaction in Summit County this year.
On March 6, the Blue River Apartments complex was purchased for $9.2 million by Tralee Affordable Bronco, an LLC registered to Tralee Capital Partners in Greenwood Village. During the last round of property assessment in 2013, the 78-unit complex was valued at $4.6 million, according to the Summit County assessor's office.
The previous owner, CAH-IDA Blue River LLC of Delaware, purchased the property in 2008 for $5.25 million.
Despite the eye-catching sales price, Michael Kelly of Tralee Capital says his firm often spends more than other affordable housing owners to give residents peace of mind far into the future. The complex was built in 1994 and still relies on the same aging, inefficient lighting and plumbing fixtures it had on opening day.
"Our game plan on all of our assets is to be long-term owners," Kelly said. "We spend a tremendous amount of money, more than 99 percent of affordable owners, to ensure the long-term viability of assets."
As an affordable housing complex, the property is supported by low-income housing tax credits through the Colorado Housing and Finance Authority. CHFA officials say the assessed value of a property is used only to gauge tax liability, which doesn't take into account the potential upgrades proposed by Tralee Capital. The $9.2 million purchase price is based more on rent potential than tax liability.
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Blue River Apartments is one of three affordable housing properties in Silverthorne, along with the nearby Villa Sierra Madre complexes overseen by Archdiocesan Housing of Denver. Units at all three properties are available only to households that earn 60 percent or less of the average median income, known as AMI.
The AMI in Summit County is $36,420 for a one-person household and $41,580 for a two-person household. Blue River Apartments has a mix of 48 two-bedroom units and 30 three-bedroom units, which are currently available for $945 per month and $1,150 per month, respectively. All of the 78 units are set aside for low-income households.
When Tralee Capital bought the property, it assumed control of the original land-use restriction agreement, or deed restriction, that the complex has had since it was built. The firm's application is under review by CHFA, which looks closely at its experience with affordable housing.
Tralee Capital manages several affordable housing complexes across the U.S., with properties in Atlanta, Orlando and Cheyenne, Wyoming. Kelly says Blue River Apartments is comparable to the Cheyenne complex, known as Prairie View. Both were built around the same time and have similar designs — Kelly dubs it a "sister property" — but the Silverthorne property is his firm's first foray into a resort market.
"We're excited about this deal and I think the residents will be very happy," Kelly said. "This isn't targeted at resort workers — it's for people who live and work in and around Silverthorne, your residents who are here 12 months a year. This is for people and families who want a place to call home."
FIXING TO RETROFIT
Tralee Capital recently completed a round of renovations at Prairie View, and Kelly now looks to spearhead a similar retrofit at Blue River Apartments.
And the process is already underway. Although the sale is less than a month old, Kelly is working with contractors and designers to find cost-efficient upgrades, including modern LED lighting for interior and exterior fixtures.
"Right now, you have this old halogen and incandescent lighting, and what these retrofits do to begin with is brighten everything up," Kelly said. "It gives the property an entirely new feel."
While the retrofit will require new materials across the complex, Kelly doesn't expect the work to have a tremendous affect on rent. CHFA lists the maximum rent for a two-bedroom unit in Summit County at $1,170, which is $225 more than the current rent at Blue River Apartments.
The purchase comes at a time when affordable housing is sparse in Summit County. The Family and Intercultural Resource Center in Silverthorne regularly works with low-income households, and in the past few years, the organization has helped struggling families find units at Blue River Apartments. It's a major boost for residents faced with the possibility of being homeless after the loss of a job or other devastating setbacks.
"Because the rent is lower, it makes it easier for families to weather these crises that come up," FIRC assistant director Rob Murphy said. "Yet even with an affordable rent price, if a family takes a big enough hit, they'll be in trouble no matter what."
For Kelly, updating the Blue River Apartments is a relatively simply and cost-effective way to make affordable housing more appealing.
"We just try to make this exciting for residents," Kelly said. "A lot of affordable owners don't always think that way, so we want to spend the extra dollar to have less turnover and have residents who enjoy us for much longer, who stay much longer."
Once Tralee Capital has decided on contractors, retrofit work will being almost immediately, Kelly says. Until then, he couldn't give a firm time line for the upgrades. The Cheyenne project saw basics upgrades six months after it was purchased, followed by more complex improvements like high-efficiency fixtures after 12 months. Those changes have already dropped water consumption by 30 percent, and Kelly expects similar results in Silverthorne.
"This creates a new blood for the property," Kelly said. "In all of our assets, we want people to be excited to come home. We know there's a shortage of housing in the mountains, and we know it will take time to get this going, but wherever we own properties we want people to be happy they're home."