(To read more on the multifamily market, click here.)

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PHOENIX-More than 20 years after going vertical with the180-unit Paradise Foothills, a local developer has opted to sellthe class B complex at a 5.5% cap rate. A Portland, OR investor,buying its third property in the area, has paid $16.4 million andplans an additional million-dollar upgrade of the complex'sinteriors and exteriors.

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According to CB Richard Ellis vice chairman Sean Cunningham, the93%-leased asset at 12231 N. 19th Ave. was put on the block becausePicerne Development Corp. is divesting various class B assets fromits portfolio. Paradise Hills is its last class B in the Phoenixmetro. "They're repositioning that money into new construction inPhoenix and Las Vegas so this is a strategic move for Picerne,"says Cunningham, who represented the seller with CBRE partner TylerAnderson.

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Cunningham says Picerne Development already had a workingrelationship with the buyer, Guardian Management LLC. Guardianacquired Picerne's River Ranch Apartments at 6152 W. Oakland St. inChandler in August 2006. "The seller knew Guardian would perform.And, they were familiar with the market," Cunningham says, addingthe comfort level is what allowed Guardian Management to outshinefive other bids for the property.

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Cunningham tells GlobeSt.com that once upgrades are complete,the asset could be brought up to class A-minus caliber, with apotential of $100-per-unit rent increases. Renovation on thecomplex will begin in the second quarter.

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"Guardian is continuing to review properties and they'd like toacquire additional assets in Phoenix," Cunningham adds. "I'danticipate them making several more purchases here in 2007."

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Paradise Valley, built in 1985, is a mix of one- and two-bedroomunits, ranging from 560 sf to 1,120 sf. Its rents go from $569 to$815 per month.

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