Bruce Savett, a founding principal of Granite Peak Partners who is in charge of acquisitions, says that the company plans to invest more than $8 million in capital improvements to the properties. The upgrades will be designed to improve the projects from their present class C-plus designation to class B status with rental rates that will reflect the upgrades.

Both of the properties that Granite Peak has acquired were constructed in the 1980s and have been under the same ownership and management for more than 18 years. Savett notes that rental occupancies in the metro Denver area are approaching 95%.

Savett expects a healthy Denver economy, which created almost 50,000 jobs in 2006, and the Fitzsimons project, only two miles from the apartment complexes, to create a strong demand for upscale rental housing. "Higher rents will mean significantly higher property values for investors," he says. "At the end of the hold period, estimated at three years, the properties will be sold with final proceeds distributed to the fund's limited partners."

Granite Peak, which targets properties in the range of $4 million to $45 million primarily in the Western US, acquired more than $72 million in apartment properties last year. Noah Hochman, the company's vice president for acquisitions, notes that the firm continues to look for additional opportunities in the Denver market.