A St. Paul property management company has bought Chasewood Gates, an upscale apartment complex in Minnetonka, for about $22.7 million.
The deal, which closed Oct. 7, is the latest in a string of major apartment sales around the Twin Cities as investors snap up top-notch buildings. At least four apartment properties have changed hands around the Twin Cities since August, most of them Class A buildings such as Chasewood Gates. The complex, built in 1988, is a 206-unit building at 6100 Chasewood Parkway in Minnetonka. It's 98 percent leased.
The sale didn't include 188 units that were previously sold as condos.
The buyers include Mike Cashill and Alan Spaulding, co-owners of St. Paul-based At Home Apartments LLC, along with a third Twin Cities investor, Spaulding said. Spaulding declined to name the investor.
At Home Apartments owns or manages about 3,700 units around the Upper Midwest, Spaulding said, but Chasewood Gates is more upscale than most of them.
"It's our first property in Minnetonka, so it's kind of our entry into that market," Spaulding said. "As a company, we're moving more in that direction."
Spaulding said the group will continue the renovation schedule that had already been set, adding upgrades such as granite countertops and new cabinets as the units turn over.
The group paid about $110,194 per unit for Chasewood Gates, 11 percent higher than the $99,000 per unit that a group of investors paid last month for White Bear Woods in White Bear Lake.
"What really drove the pricing here [for Chasewood Gates] is that people are very optimistic about the forward operations of apartment buildings," said Abe Appert, a first vice president at CB Richard Ellis who handled the deal along with colleague Keith Collins. "There were multiple bidders competing with each other that drove the price up substantially."
Appert said the property's low capitalization rate -- a benchmark for measuring real estate returns -- was unique, and a sign that the apartment market is improving. A capitalization rate is a property's annual net operating income divided by the original price paid for the property, or its current market value. Rising property values push cap rates down.
"It's the lowest cap rate that we've seen in the last four to five years, since the peak in 2006," Appert said.
The Chasewood sale included two parcels that had separate owners, Appert said. CAPREIT, a privately held apartment investor based in Rockville, Md., was a partner in both ownership groups, he said. The other owners included Fannie Mae and an institutional owner called Apollo, Appert said.
Jennifer Bjorhus • 612-673-4683