TUCSON-HSL Properties acquired the 238-unit class A Bear Canyon Apartments from lender Arbor Bear Canyon Holdings through an REO offering. The locally based buyer paid $23 million for the 95% occupied multifamily property.

HSL Properties is the most recent owner of the property, which had a fairly active CRE trading history in its 15 years of existence. Located at 9055 E. Catalina Hwy., the complex was built by Evans Withycombe, and acquired in 2004 by an Omaha developer as a condo conversion play. When the bottom dropped out of the condo market, the lender took back the property and sold it to a Denver partnership in March 2007.

Weeks later, lender Second City Capital Partners out of Canada took back the complex through a deed in lieu of foreclosure, and by July, 2007, Bear Canyon Apartments ended up in the portfolio of aggressive Seattle multifamily property buyer S-J Management which was, at the time, investing heavily in Arizona. The Great Recession and resulting economic downturn led to problems for S-J Management and its portfolio. This time lender Arbor Capital Management LLC took back Bear Canyon Apartments; again as a deed in lieu of foreclosure.

HSL Properties executive vice president Omar Mireles tells GlobeSt.com he’d been keeping an eye on Bear Canyon Apartments for years; from the time it failed as a condo conversion all the way to last summer, when Sperry Van Ness brought it to market at a $29 million ask. “We were finally able to strike a price for $23.2 million,” Mireles comments.

He goes on to say that, even with its colorful history, the multifamily property is in terrific shape and won’t require much in the way of fix-ups. Though stabilized from a leasing standpoint, Mireles says the upside potential lies in pushing rents and reducing operating expenses.

“It’s one of those deals that’s in a mature market, that’s stable, and with high barriers to entry,” he explains. “There’s no real vacant land that would be available for rezoning considerations.”

With the dust settling on the Bear Canyon Apartments deal, Mireles says he’s looking for additional commercial real estate deals in Arizona, but acknowledges they’re hard to come by. Because the multifamily sector is currently the darling of investors, “we’ve not been able to buy as much as we’d like because there’s a lot of equity chasing deals in Phoenix and Tucson,” he remarks.

The solution? Construction. “We’ve started developing brand new product because of the pricing on existing deals,” Mireles explains, going on to say that HSL will break ground on two projects in Tucson this summer and fall.