PHOENIX-A 182-unit pair of adjacent apartment complexes have fetched their $6-million asking price after going on and off the market within a week as a group of California and Arizona investors chased the upside from a 20% vacancy.

Newcastle Investment, Foresight Investment Group and Bayshore Holdings purchased the Promenade and Glenrosa Garden Apartments at 2330-2332 W. Glenrosa Ave. Todd Braun of Cushman & Wakefield of Arizona Inc. says the value-add proposition sparked the quick turn. Braun and C&W's Paul Gross represented the Chicago-based seller, V&V LLC, and the buyers.

"It was viewed as a good value-add opportunity because it has some deferred maintenance issues," Braun tells GlobeSt.com. "But also on a leasing level, they need to clean up the tenancy and do a better job of management than the previous owner had done." Occupancy is down to 80%. The seller had held it for a few years but "felt the timing was right to sell," he adds.

Braun says the chance to snap up a 20-year old complex at roughly $33,000 per unit spurred as many as 10 offers. "It was the low price per unit that really caught people's attention," he says. "We picked an entity that had an aggressive package from day one. They are an ownership entity that will self-manage the property, hands on, and bring it up to full occupancy."

According to Braun, the investors were chased out of the California multifamily market by low cap rates. "We are seeing robust activity because a lot of equity is coming into the market from other areas, especially California," he says, where cap rates have become too low to justify some investments. "Phoenix is viewed as a good growth opportunity with better returns, even though by Phoenix standards this is viewed as a soft market."

But, Braun says, it wasn't the cap rates that drove the buyers to the property. The lure, he explains, was based on the potential at hand.

Rents in the gated development average $515 per month. All units are two-bedrooms, one-bath. The buildings' location near Interstates 17 and 10 added to their appeal, according to Braun.