Located at 720 W. O'Neil Dr., the class A, garden-stylecommunity is the first acquisition the firm has made in CasaGrande, although it has been actively seeking opportunities inTucson and Phoenix markets, according to Omar Mireles, executivevice president of HSL Properties.

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Mireles tells GlobeSt. that while Casa Grande is a tertiarymarket, HSL Properties believes it is an area that will experiencevery significant growth in the long term. Moreover, Desert SandsApartments currently is underperforming the market's averageoccupancy by more than 10 percent, reporting an occupancy rate of74 percent at purchase time despite its positioning as one of thetop two apartment communities in the market.

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"We have a great opportunity to vastly improve the property'sperformance in a relatively quick timeframe," Mireles says. "Theproperty is a newly constructed, high-quality apartment communitythat we were able to acquire well below replacement value."

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Constructed in 2008, Desert Sands Apartments has a mix of one,two, and three-bedroom units ranging from 664 square feet to 1,042square feet. Rents range from $638 to $835 per month.

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HSL Properties obtained a $12.88 million loan from JP MorganChase, Mireles notes, adding that the loan was in essence anassumption of the financing that the seller had in place. "Lastly,we were able to place a very attractive bridge loan on the propertythat enabled us to leverage almost 77% of the acquisition," hesays.

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As with HSL Properties' other recent acquisitions, the firmplans to hold Desert Sands Apartments for the long-term (five to 10plus years), Mireles says. "Of course, if the right offer comesalong, we will take a serious look at it, but we are going intothis investment with long-term operating cash flow expectations,"he explains.

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Art Wadlund of Hendricks & Partners' Tucson officerepresented the seller in the transaction.

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