Buyer Of Apartment Building In West Washington Park Aims To Own 1,000 Units In Denver Metro By End Of 2022

November 4, 2020

A $16.2 million apartment purchase in West Washington Park is just the beginning for a multifamily investment firm with an aggressive growth target for the Denver metro.

Brennen Degner, co-founder and CEO of Playa Vista, California-based DB Capital Management, said his firm aims to own 1,000 apartment units in the Denver area by the end of 2022.

DB Capital Management began making headway toward that goal in October with the purchase of Red Owl Lofts, a 46-unit apartment community at 90 S. Logan St.

The deal, which marks the first Denver transaction for the three-year-old firm, isn’t entirely indicative of the types of properties it’ll be eyeing in the future, Degner said. DB Capital Management will likely seek out larger value-add properties in the multifamily segment as it expands its Denver portfolio, according to Degner.

But Degner said the Red Owl deal provided an opportunity to grab a foothold in the market.

“It’s on the smaller side for what we would focus on now,” Degner said. “But we just saw it as a great play.”

DB Capital Management has so far notched roughly $150 million in acquisitions across its target markets, and currently has about 1,000 units under management, Degner said. The firm aims to quadruple that number over the next four years.

The firm is focused on markets that have seen significant increases in tech employment and rank highly in terms of quality of life, Degner said. Red Owl is the latest addition to a portfolio that includes properties in Austin, Salt Lake City, Los Angeles and Portland. Phoenix and Dallas could be future target markets as well, Degner said.

Degner, who was born and raised in the Denver area before attending college in Arizona and later moving to California, has watched the “explosion” in the Denver market for years now, he said. About a year ago, the firm hired regional vice president Darren Hulick to lead acquisitions in the area.

“There’s a lot about the fundamentals of Denver that we really like,” Degner said. “Despite the huge amount of construction deliveries over the past 10 years or so, it’s been able to keep up with absorption pretty well.”

Degner and co-founders Adam Barzilay and Devin Antin started DB Capital Management roughly three years ago after Antin’s father, the founder of VCA Animal Hospitals, sold his company to Mars Inc. for approximately $9 billion.

Antin and Degner had done a couple of small apartment deals together up to that point. But with Antin’s family office flush with capital after the sale, they decided to build a larger operation.

DB Capital Management has funded its deals with a combination of money from outside investors and the family office, Degner said, and focuses exclusively on multifamily investments.

Denver and Austin will be focal points for the firm’s growth over the next several years. DB Capital Management has similar targets for both cities, aiming to grow its Austin portfolio to 1,000 units by the end of 2022 as well, Degner said.

DB Capital Management doesn’t currently have any other properties in the Denver area under contract, but it has a sizable pipeline, Degner said. The market has been “very competitive,” Degner said, although he noted that activity has calmed in recent weeks after spiking roughly a month and a half ago.

The company will rebrand Red Owl Lofts as Summit at Wash Park and will embark on a renovation that will include improvements to common areas as well as the interiors and exteriors of the studio, one-, two- and three-bedroom units over time.

“The current rents demonstrate a sizeable spread against new luxury product in the market and provide renters with an affordable, upscale option in one of Denver’s most desirable neighborhoods,” Hulick said in statement.

The off-market transaction was arranged by Justin HuntAndy Hellman and Katie Hufnagel of Newmark Colorado. David Treadwell of Newmark arranged the acquisition financing.


Author: James Rodriguez

Source: Denver Business Journal