$51M Loan Speeds 447-Unit Condo Conversion

SCOTTSDALE, AZ-Jumping aboard the conversion bandwagon, an affiliate of locally based Avenue Communities has obtained $50.7 million in financing to change a 447-unit, gated apartment complex into condominiums. The developer of the three-year-old Lofts at Grayhawk will begin to convert the property in the coming months.

Avenue principal David Dewar says the decision to take the 20100 N. 76th St. asset down the same road as a sister property is a way to recoup its $75-million investment in the development. "It's a way to get out of a troubled asset class," Dewar tells GlobeSt.com. "It's one way to get our investment back."

Avenue's original intent was to hold the Lofts and neighboring Venu as rental properties. In addition to the tough multifamily market of the past few years, the recent flurry of condo conversions spurred the change in plans, according to James J. Dow, vice president of the Chicago-based Corus Bank, which provided the Lofts' conversion financing. The terms of the financing aren't available, but the lender's press release did say that the loan came with "higher leverage" and "non-recourse nature."

The Avenue team has completed the conversion of the four-year-old Venu, formerly the Enclave. "That market has been extremely strong," Dow says. "Sales have been extremely successful."

The Venu's 388 units came to market at $188,900 for an 898-sf apartment and went up to $283,900 for a 1,216-sf floor plan. Dewar says the company is not yet sure how it will price the condos at Lofts at Grayhawk. Once Avenue converts the property, it will market the condominiums through its Avenue Realty unit.

The 22-acre Lofts at Grayhawk consists of 38 buildings with 451,734 sf of saleable area. It is 92% leased. There is no word yet on what property changes Avenue might make to the Lofts at Grayhawk, but as part of the Venu conversion it transformed the former leasing office and fitness facility into a $2-million "great room" for condo residents to socialize.

The well-known Phoenix developer is under way with the 88-unit Third Avenue Lofts in Scottsdale. Due to come on line in October, the units will be priced from $375,000 to $1.5 million. According to sales materials, the Third Avenue project will offer "a funky New York City feeling."

Avenue is run by Ken Losch and David Dewar, who along with a third, now-deceased partner, built the Venu and Lofts at Grayhawk through the now-defunct Magellan Real Estate.