CPP/AEW Spearheads $53M Sale of 442-Unit Sunscape Apartments

SCOTTSDALE, AZ-San Diego-based Crown Pacific Properties, LLC, and its partner, AEW Partners IV, a fund managed by AEW Capital Management in Boston, have sold the 442-unit Sunscape Apartments for $53 million, a little more than a year following the joint venture's $34-million purchase of the property.

The property, which the self-represented Crown Pacific purchased with help from a private equity company in Chicago, will undergo condominium conversion. Located at 3500 N. Hayden Rd., the 1979-constructed property, while under CPP/AEW ownership, underwent $3.5 million worth of interior and exterior upgrades. The property, situated on 18.94 acres and which was 75% occupied at time of closing, offers 216 one-bedroom units, between 700-850 sf and 226 two-bedroom units, averaging between 900 sf to 980 sf.

"Our original business plan when we'd purchased this with AEW in 2004 was to buy it, make fairly significant interior improvements and some exterior ones, adjust the rents, and reposition the property," says John Ed Easley, president and CEO of Crown Pacific Properties. "We were well under way on that."

Easley tells GlobeSt.com that upgrading will continue to make the units or condo conversion and sale, with $10,000 to $12,000 per unit budgeted for the process. "We'll begin the upgrades during the next couple of weeks, and expect to launch condo marketing in February, 2006," he says. "Our underwriting says we have 16 months to sell the property out." The sale price per unit will range between $200,000 and $220,000, he adds.

The transaction is the joint venture's third sale in as many months; having already sold Phoenix-based properties, Landmark Tower for $29.25 million and the Portofino Apartments for $50.6 million. The partnership also owns the 244-unit Lakefront at West Bay, also in Phoenix, which Easley indicates will be put on the market sometime in 2006.

"Once we've sold that project, we'll be fully divested from the AEW partners on this go-around," he says, adding that the joint venture will continue to seek other potential opportunities.