Overview
Marcus & Millichap is pleased to present Foothills Place Apartments (“The Property”), a low-density, 48-unit multifamily asset located in North Weld County, Colorado. The property is in the town of Windsor, which is located just east of I-25 in Northern Colorado, and is positioned between Greeley, Fort Collins, and Loveland, offering residents excellent access to nearby employment and amenity hubs in the area. Originally built in 1985, the property consists of 48 one-bedroom units that average 638 square feet, all of which feature private front- and rear-entrances, spacious layouts, and ample storage space throughout the units. The property is situated on a large, 4.47-acre lot that offers a significant amount of green space, and features a central leasing office and resident lounge, as well as a pergola and ~69 off-street parking spaces. Foothills Place Apartments offers numerous opportunities for new ownership to implement value-add strategies and improvements to the property via the following plans: interior renovations on units that convert to market-rate status, converting the leasing office and resident lounge into two additional one-bedroom units, adding income-producing carports, and converting existing, unused site area into community amenity space.
Originally built as part of the United States Department of Agriculture’s Rural Multifamily Housing, the property is subject to a deed restriction that has recently expired. While the deed restriction has expired, investors are not permitted to evict carryover (voucher) tenants for the purpose of improving the units and bringing them to “market”. The units currently occupied by the voucher tenants will only convert to market-rate status when existing tenants vacate their units. Due to the effects of the restriction, Marcus & Millichap has modeled loss to lease burn off and other income implementation over a six-year period.
Investment Highlights
Mission Driven Financing: The project would be considered 100% mission driven as all rents fall below the 80% AMI threshold for Weld County 1 bedrooms ($1,604). Hitting this metric will allow agency lenders to reduce their rates by 30 basis points.
Desirable Unit Layout: Individual exterior front and back doors to all units is a desirable attribute that sets the property apart from the comparable properties in the submarket. Additionally, all units feature ample storage space both inside and outside of units, with select units offering walk-in closets.
No New Units Under Construction: There are currently no multifamily properties under construction in Windsor and currently only two properties are proposed. Limited near-term deliveries will keep demand high, vacancies low, and allow for future rent growth.
A Favorable Position in the Marketplace: New construction stock in the immediate submarket is achieving rental rates approximately 10 percent higher than proforma rents at Foothills Place. Additionally, the average household income within a one-mile radius of $109,573, suggests that current rents can increase by nearly 90% before surpassing an affordability threshold of 30% rent-to-income ratio.
Projected Rent Growth: Projected rent growth in Windsor over the next 5 years is 21.3%, while projected national rent growth over the same period is 17.9%. Windsor’s projected rent growth will outpace the projected national rent growth by 19%.
Value-Add / Value-Creation Opportunities
Other Income Opportunities: The property currently is only capturing laundry income as an other income source. Properties in the submarket charge for other income sources such as pet rent, utility reimbursement and CAM fees. A buyer has the ability to capture an additional $87,296 of annual other income within three years of ownership.
Interior Unit Renovations: The property offers spacious, well-maintained units that offer an excellent basis for interior unit renovations. As existing tenants vacate their units, new ownership can renovate units to include modern cabinets, stone countertops, stainless steel appliances, hard surface vinyl flooring, and updated bathrooms, allowing them to achieve market rents of $1,425/month.
Office to Units Conversion: The space currently being used as an office has the same footprint as two units. A buyer could convert that space to two additional units to maximize their returns and add significant value to the property. A buyer has the ability to capture an additional $20,000+ of annual net operating income and generate ~$340,000 in value at sale through this opportunity.
Space for Amenity Build Out: The property offers ample green space that could be built out with a community grilling area and dog park. The parking lot is situated in a way that would allow for the easy addition of covered parking. These additions will drive overall rent levels with covered parking offering an opportunity for additional other income.
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