The Dove Valley apartment community is one of 24 properties being sold by CBRE on behalf of the Zeff family.

Carmel Cos.’ apartment portfolio in the Denver area – believed to be the largest on the market nationwide – is being listed for $967.4 million, officials confirmed today.

The portfolio is broken into two parts.

The largest piece includes 22 properties and is listed at $902 million. The remaining seven properties are listed at $65.4 million, said Dan Woodward, a multifamily broker who is part of the CB Richard Ellis team listing it. The portfolio includes more than 8,000 units.

“I don’t know of a bigger portfolio for sale in the country,” Woodward said.

Tuesday first bid date

The first deadline for prospective buyers is next Tuesday, July 12. The properties were first put on the market last May.

“July 12 is our first bid date to kind of get a feel for where the offers are coming from, at what price, how the equity is being matched up with the sponsors, how they are going to finance the deal, and so on,” Woodward said.

From there, CBRE will “narrow the field,” and will invite back the strongest bidders to participate in a more formal process.

The strongest prospective bidders will be given tours of the property, which have not been offered until now, although Woodward noted that there is nothing stopping a prospective buyer from driving by any property.

“We are then expecting to have a round of best and final offers,” Woodward said.

He expects the process to move pretty quickly.

“I think within a week we will have chosen our buyer – or buyers,” he said.

Woodward said the Zeff family is willing to sell the entire portfolio – either the 22 or 29 properties – to a single buyer, or break it up. The portfolio was built by the late Kal Zeff.

“I don’t think the seller has a preference,” he said. “I think it is much more about creating the most value.”

The prospective buyers are all over the map, as far what they would like to own.

“There are a handful of groups who plan to bid on the entire portfolio and many more bidding on a smaller, sub-portfolio and even more groups that have indicated they want to bid on one or two of the assets,” Woodward said.

400 confidentiality packages

Demand has been strong.

“I would say that we have sent out close to 400 confidentiality packages,” to those requesting information, he said. “I would say that exceeds our expectations by a little bit. It is such a high-profile portfolio at a time when the rental market is very strong, we knew that there would be a huge amount of interest in it.”

Interest has come from large, national groups, as well as local groups. Some potential buyers are looking at tapping foreign capital.

The Carmel portfolio not only will be by far the largest apartment sale in Denver’s history, but also could serve as a catalyst for other apartment deals, as big players in the investment world focus on Denver.

Spotlight on Denver

“I  would say this deal is shining a light on Denver,” Woodward said.  “Just because of this portfolio, a lot of people are taking a look at Denver. Some of these people have never looked at Denver before. The dynamics here are all very good, with rents rising and vacancies dropping.”

Jeff Hawks, of Apartment Realty Advisors, agrees.

“The timing of this portfolio coming on the market is perfect,” Hawks said. “Vacancy rates are the lowest they’ve been in 10 years, rents are increasing and it is a great time to get financing, with interest rates being so low. “

Hawks said that he, and other brokers in the market hope that CBRE gets top dollar for the portfolio.

“If they get the highest price possible, it helps everyone else’s comparables,” he said.

Hawks also agreed with Woodward that the Carmel portfolio is putting Denver on the map as far as interest from apartment investors.

“What it is doing is having a lot of people focus on Denver who have never been in this market before,” Hawks said. “This is a big-league portfolio. There have only been a few times in history when you have the opportunity to own a portfolio of this size. And to have it all in one market makes it that much more unique.”

To learn more,  visit this  link for Dan Woodward’s contact information.

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Kal Zeff , described as the great-godfather of Denver apartment developers, was buried on Tuesday in Israel, where he was born 78 years ago.Mr. Zeff ‘s history in Denver is a true rags-to-riches story: a new immigrant whose business savvy over the years made him into one of the most successful – albeit low-profile – real estate developers in the city.

His company developed and owned about 10,000 apartment units in the metro area.

” Kal wanted to be buried near his father and mother in a little place called Magdiel (in central Israel),” said his friend of more than 50 years, Jack Grynberg, who was reached in Israel, hours after the funeral.

Mr. Zeff , who was born Dec. 25, 1926, in what is now known as Israel, died in his Cherry Hills home early Saturday morning. Mr. Zeff bought the home in 1988 for a bargain $1.7 million from the late billionaire Marvin Davis.

“It’s interesting reflecting on an era that has passed” with Mr. Zeff ‘s death, said Larry Mizel, chairman of MDC Holdings Inc., parent of Richmond American Homes and the largest Denver-based home building company. Mr. Zeff was the soil engineer on the first apartment building that Mizel developed in the late 1960s.

Kal Zeff  extraordinary businessman

Mizel described Mr. Zeff as someone he “looked up to and respected. . . . He was always a very careful and cautious businessman. Kal was always very analytical in everything he did. You could assume if he did it, it made good business judgment. He was a good barometer of the direction of business and of the economy.”

Mr. Zeff fell and hit his head and died before he reached the hospital, Grynberg said. An autopsy wasn’t performed because Mr. Zeff was an orthodox Jew, and an autopsy is prohibited.

Mr. Zeff founded and owned Carmel Cos., believed to be the largest owner of apartments in the metro area. Chicago-based Equity Residential Properties, the nation’s largest apartment owner, for comparison, owns about 6,500 units in the metro area.

Israel roots deep

Mr. Zeff named his company after Mount Carmel in Israel, where as a member of Israel’s underground army he held off Arab forces at a munitions dump as the fledgling country was created in the late 1940s.

In the 1920s, Mr. Zeff ‘s parents had emigrated from Lithuania to Palestine, as it was then called.

After graduating with a degree in engineering from Technion University, he came to Denver in 1953 to earn his graduate degree at the Colorado School of Mines in Golden, Grynberg said. Mr. Zeff had a dispute with the School of Mines when it wouldn’t accept some of his credits, and he transferred to the University of Colorado, he said. After graduation, Mr. Zeff started a soil-engineering company but soon began developing apartments.

True long-term investor

He was well-known for never selling anything, holding on to his apartments through good cycles and bad.

“He was a real rags-to-riches story,” Grynberg said. “Of course, he built a very nice fortune. But he was also a very generous man. He gave to a lot of charities.”

Mr. Zeff gave $5 million to Technion University, and a representative from the university spoke at his funeral about Mr. Zeff and his storied life, said son Ron Zeff , who heads Carmel Partners in San Francisco, one of the nation’s largest private real estate investment firms focused exclusively on apartments.

“He certainly came to Denver with nothing,” said Ron Zeff . “He was very much a family man. And somebody who had a lot of integrity. He was never motivated by what other people thought or did. He relied on his own judgment.”

Mr. Zeff ‘s penchant for developing properties that he owned free and clear was evident in a recent deal. He built an apartment community along the overbuilt southeast corridor, despite objections from some advisers. Because he owned the land and building, he kept the rental costs lower, and it precluded competitors from building rival communities.

Grynberg said that last month he was in San Francisco for the bar mitzvah of one of his grandson.

“It was a shock to hear that Kal had passed away,” said Jeff Hawks, principal of Apartment Realty Advisors. “I was talking to him two weeks ago, and he seemed in pretty good shape.”

Hawks agreed with Mizel that Mr. Zeff ‘s death marked the end of an era.

“He built so many apartments that he alone controlled for the last 40 years,” Hawks said. “He was the great-godfather of apartments in Denver.”

Despite his vast real estate holdings and his wealth, Mr. Zeff was an extraordinarily private man. ”He never was interested in the limelight,” Ron Zeff said.

Didn’t want his name in the newspaper

Indeed, when he bought Marvin Davis’ home, he created a shell company to buy it rather than under his own name.

When I asked him why, he replied:  ”We were hoping to keep it out of the newspapers.” He then deadpanned: “It didn’t work.”

In addition to his son Ron, Mr. Zeff is survived by his wife, Joyce; daughter Diana Zeff Anderson, of Israel; son Michael, of Denver; daughter Dana, of San Diego; and sister, Jaffa Herzfeld of Israel.

Contributions can be made to Jewish Family Services or Hadassah.

Contact John Rebchook at JRCHOOK@gmail.com

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The Dove Valley apartment community is one of 24 properties being sold by CBRE on behalf of the Zeff family.

CB Richard Ellis today confirmed it has been retained to sell the Carmel Cos.’ apartment portfolio in Colorado, which it describes as the “largest multifamily offering in the nation.”

The sale was first reported by InsideRealEstateNews on Wednesday.

CBRE is the exclusive adviser regarding the sale of the portfolio, which it said consists of more than 8,000 units in 24 properties developed between 1980 and 2000.

Zeff built apartment empire

Carmel Cos. was started by the late Kal Zeff, who built the largest empire of apartment units in the Denver area. Zeff died in 2005 and is survived by four children that are selling the apartment portfolio, according to sources.

CBRE’s Multi-Housing Group was retained the board of directors of the family owned Carmel Cos.

Team leaders include Dan Woodward in Denver and Tyler Anderson in Phoenix. Additional members of the marketing team include Sean Cunningham and Asher Gunter in Phoenix and David Potarf and Jordan Robbins in Denver.  This group has been assigned to market and sell the entire portfolio, either as a bulk purchase or on an individual one-off basis.

“The Carmel Companies portfolio presents a tremendous opportunity to purchase multifamily assets within the Denver market in preparation for the substantial increase in rental rates we expect to see over the next five years,” Anderson said in a statement.

Added Woodward: “This represents a unique one-time opportunity for a new buyer to acquire a number of well-located, high quality, family-owned assets with tremendous value-add potential.”

Marketing will commence in early June, with offers being taken in early July.

Bidding war possible

CBRE did not publicly address the potential price of the sale, which is typical. But one competitor said he thought it could sell for around  $800 million. Other observers, however, believe that valuation is too low. “It could go for north of $900 million,” said one person familiar with the portfolio. He said he thinks there could imagine bidding wars erupting. “I would think so,” he said. “Everyone wants to be in Denver.”

One official said he believes a bulk purchase would not fetch the highest price.

“It would probably sell for less if they sold it as one package, because the investor would demand a higher rate of return,” said one apartment expert. “They would probably make more if they sold them on a one-off basis to more entrepreneurial investors that could see a value-added opportunity for specific properties, but that  would obviously take longer. The path of least resistance is to sell most of them in big blocks, but we shall see.”

He described the portfolio as being “well-managed, well-kept up. It is a really solid portfolio.”

The media room in one of Carmel's apartment communities.

However, he said that the properties have an “inventory of different products across a wide-stretch of time,” and the most favored buildings that demand the highest prices have been developed in recent years. “However, it is a great time to sell apartments. Interest rates are low and occupancies are high.”

He said that a real estate investment trust, or a REIT, probably would not be a likely buyer, as they don’t like the expenses of maintaining and operating older properties. “A lot of REITs have disposed of their older products,” he said. “But it’s possible that it could be very attractive to private equity groups or syndicators that would either want to create an apartment REIT or get a major foothold in a strong, growing market in one fell swoop. Deals like this don’t come along very often, so it could attract buyers you wouldn’t normally think of as buying multifamily products.”

Gordon Von Stroh, a University of Denver business professor and an expert on apartments, said that this truly is a once-in-a-lifetime opportunity.

“It’s a well-managed, well-built portfolio by a respected developer,” Von Stroh said. “Opportunities like this seldom come along. I would expect there will be a lot of interest from investors in this portfolio.”

Contact John Rebchook at JRCHOOK@gmail.com

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