In a significant stride within the real estate sector, an affiliate of Oberndorf Real Estate Management, LP. (OBREM), formerly known as The Axton Group, alongside The Bascom Group, LLC (Bascom), has announced the acquisition of the Hearthstone at City Center, an expansive 360-unit multifamily community located in Aurora, Colorado, for a formidable sum of $74 million. This acquisition marks Bascom’s fourth of the year 2024, showcasing the firm’s continued aggressive expansion strategy amidst a complex investment landscape.

Constructed in 1984, Hearthstone at City Center occupies a sprawling 18.25 acres of land, offering a resort-like environment with its low-density, garden-style apartments. The property consists of forty-one buildings that house one-, two-, and three-bedroom units, providing ample space for a diverse community of residents. The strategic placement of Hearthstone, mere minutes from the I-225 highway and the Aurora Metro Center Station RTD Line, positions it as a pivotal residential hub with superb connectivity to Denver’s core areas, including the bustling Downtown, Denver International Airport, and several major employment hubs.

The partnership aims to further incentivize the attractiveness of Hearthstone through an extensive value-add renovation program. This entails the upgrading of appliances, countertops, lighting, and the introduction of additional in-unit amenities such as washers and dryers and wood plank flooring. The comprehensive plan also extends to revamping common areas like the fitness center, leasing center, pool, and a multipurpose activity area to enhance resident satisfaction and community engagement.

This acquisition is especially noteworthy in the context of the current economic climate, marked by significant volatility including a challenging transaction market and elevated interest rates which have impeded new developments. The strategic acquisition at an attractive yield is indicative of the partnership’s active and opportunistic investment strategy, targeting undervalued assets that present a significant upside through strategic enhancements and repositioning.

Peter Oberndorf, Managing Director at Oberndorf Real Estate Management, voiced optimism about the long-term trajectory of the Aurora submarket and the broader Denver Metropolitan Statistical Area (MSA). This outlook is grounded in the expectation that the current high-interest rate environment and recent development restrictions will curtail new supply, thereby stabilizing and potentially enhancing the value of existing properties like Hearthstone.

For Bascom, Hearthstone represents the 37th acquisition in Colorado and the 10th in Aurora, underlining the firm’s strong investment focus in the region. This latest investment adds to Bascom’s extensive portfolio of multifamily properties, showcasing its expertise in identifying and capitalizing on value-added and distressed properties.

The acquisition of Hearthstone at City Center by OBREM and Bascom is not only a testament to their strategic foresight and operational acumen but also reflects a broader trend within the real estate investment sector towards value-add opportunities amid shifting macroeconomic conditions. As the partnership embarks on its ambitious renovation and repositioning plan, Hearthstone is poised to solidify its place as a premier residential offering in Aurora, enhancing the living experience for its residents while offering a compelling investment proposition.