SCOTTSDALE, AZ-A pair of Chicago-area real estate development and investment firms have entered the Phoenix region by acquiring the 268-unit Signature at Scottsdale Horizon apartment complex for $25.5 million or $95,149 per unit. The companies plan to convert the buildings into condominiums following minor renovations.

Chicago-based Oculus Development LLC and Highland Park, IL-based Pickus Cos. bought the property in a joint venture. Both companies are active in the Midwest, but the Signature acquisition is their initial foray into Phoenix. "We knew we wanted to go into a growth market," Oculus vice president Tony Lamonia tells GlobeSt.com. "We started sniffing around Phoenix, saw this and jumped on it. Phoenix gets 100,000 new people a year in population. Even if there's overbuilding, it gets absorbed. Your risk is lowered quite a bit by going into these markets."

The 15-building property at 15095 N. Thompson Peak Parkway is 92% occupied, according to Jeff Teetsel, Phoenix-based vice president and regional manager at Fremont Investment & Loan. Fremont gave a $20.3-million acquisition and condo conversion loan to the buyers; equity funding was provided by Boston-based Overland Realty Capital. The Capital Advisory Group in Phoenix arranged the financing.

The complex was sold by the same firm that developed it in 1995, JW English Co., which has been steadily selling assets since the death of a principal sponsor about a year ago, sources say. "I believe this was the last asset in the portfolio to be disposed of," Teetsel tells GlobeSt.com. JW English had developed a number of apartment projects in the Phoenix area, he says.

With a sought-after Scottsdale location where condo conversions have steadily been coming to market, interest in the property was enthusiastic. It went on and off the market "within a couple of months," says Teetsel, who says there were "no fewer" than 15 offers. The property was listed by Steven H. Goldstein with Scottsdale-based Amercon Realty Services. Oculus, which represented itself in the transaction, had been in touch with Goldstein as it explored the Phoenix market. "He brought the deal to us," Lamonia says.

Teetsel says the sale closed quickly. "That was what the purchase and sale agreement required," he explains. "Because of the competition for the asset, no one wanted to extend it because the seller could have gone back and got a higher price."

To prepare for the condo conversion, the JV plans to sink more than $4 million into renovations, starting in the next three to six months, according to Lamonia. "The buildings are in great condition, only nine years old," he says. The renovation price tag includes adding new security gates, changing the buildings' exterior and common areas and spending up to $13,000 per unit on the apartments' interiors to add some options for certain condo buyers. Meanwhile, Oculus and Pickus will start marketing the condos in the $120,000 to $200,000 price range. Currently, the units rent from $675 to $1,050 per month.

Lamonia says there's great potential to fill an underserved niche in the Scottsdale area with the price points attached to the units. "There's a housing gap there," he says. "Years ago in Phoenix, there was no need for condos--if you could buy a house for $110,000, why would you buy a condo? But now in Scottsdale, single-family houses are going for $450,000, $500,000 so there is a need for these. You can spend $120,000 and get these amenities." The complex features two pools and spas, fitness center, sauna, business center and clubhouse.

If things go well with the Signature conversion, Oculus and Pickus will "probably" do more in the Phoenix area, Lamonia says, either from the ground-up or more conversions. That goes for other growth markets that the companies now are eyeing, such as Las Vegas and Southern Florida, he says.