CHANDLER, AZ-A slower condo conversion market has spurred local developer Mark-Taylor Residential Inc. to sell the 352-unit San Palacio Apartments. The two-year-old complex has sold for $58 million to a San Diego buyer, who's working to expand its local footprint.

"Mark-Taylor was going to convert San Palacio and had started the process for conversion," explains Sean Cunningham, vice chairman for CB Richard Ellis' Phoenix office. By the time the administrative process was completed for the 92%-leased complex, the condo market had slowed so Mark-Taylor decided to sell the 2255 W. Germann Rd. property as an operating asset, according to Cunningham, who teamed with CBRE vice chairman Tyler Anderson and first vice president Jack Hannum to steer the sale.

Premier Residential Communities, represented by principal Jose Lombrozo, is no stranger to the area, having pushed its owned and managed class A properties in metro Phoenix to 2,824 units with the San Palacio acquisition. "We had 13 offers during the marketing process and Premier was one of the top offers plus they had a relationship with Mark-Taylor," he tells GlobeSt.com.

Cunningham points out that conversion plans mean a good upside for the new owner. "When Mark-Taylor was looking at conversion, they were doing some larger lease expirations than they typically do," he says. "But now, with those expirations behind them, the typical expiration policy is in place. It has a strong upside with rent collections and the new owners will see the ability to increase occupancies and reduce some concessions."

San Palacio Apartments has one-, two- and three-bedroom units with 689 sf to 1,209 sf. The monthly rents range from $858 for a one-bedroom, one-bathroom apartment to $1,394 for a three-bedroom, two-bathroom unit.