"We went to market at $13.7 million, which was extremely aggressive," says Rue Bax, an investment adviser with Sperry Van Ness' Phoenix office. He explains the price for the 2601 E. McKellips Rd. complex came down due to needed repairs and a 7.59% interest rate on a four-year loan with the Newark-headquartered Prudential Financial Inc.
Bax tells GlobeSt.com that Red Mountain liked the 16-building development when it was first put on the market, but thought it was a bit too pricey. "After it fell out of escrow and the price was reduced, we were able to revisit a potential acquisition with the buyer," he says.
The 11.8-acre property is located near the intersection of Gilbert Road and Loop 202. The 19-year-old complex has 64 one-bedroom apartments and 192 two-bedroom units, ranging from 650 sf to 950 sf. Monthly rents range from $650 to $950.
Reflections at Red Mountain was 81% occupied at sale time. "There's some value-added opportunity with the complex because it is underperforming the market in terms of leasing," Bax says. "The marketwide occupancy is about 6% to 7% higher." The deferred maintenance includes parking lot repairs and a broken hot tub, he says. In addition to the repairs, the new owner plans to update landscaping as part of the repositioning plan.
Sperry Van Ness' Phoenix office brokered both sides of the deal, with Bax and Neil Sherman handling talks for the seller. Danny Lee represented the buyer.
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