Canadian Converter Ponies Up $26M for 195-Unit, Class A Complex

PHOENIX-Three years after acquiring Acappella Apartments for $14.4 million, a Palm Springs, CA investment group has sold the 195-unit, class A complex for $26.3 million to a Canadian condominium converter.

SFT Tigerfish LLC, represented by Tyler Anderson and Sean Cunningham with CB Richard Ellis in Phoenix, sold the 1999-constructed property at 3302 N. 7th St. to Mentor Properties of Toronto. Mentor, which was self-represented, will begin conversion renovations on the six-building complex in 60 to 90 days. Reservations for condo sales most likely will start within months to the renamed Brick Lofts.

Mentor plans to spend about $5 million to upgrade exteriors and common areas plus put roughly $14,600 per unit into the interiors. Unit prices will go from roughly $150,000 to $250,000.

According to David Sotolov, vice president and loan originator with Freemont Investment & Loan's Phoenix office, the transaction marks Mentor's fifth multifamily asset purchase for condo conversion in the area. "The first project, Scottsdale Bellvue, is sold out. And the second project, which used to be San Mateo Apartments and is now Plaza Residences, is 50% sold," says Sotolov, who helped arrange the acquisition loan for Mentor. "They're looking for more properties."

The Acappella, with its mix of one- and two-bedroom units, was 95% occupied at sale time. Apartments range from 760 sf to 1,217 sf.

Sotolov tells GlobeSt.com that Mentor's $26.3-million loan includes a hold-back for the renovation. He adds the two-year loan is interest-only at a floating rate with no amortization.

Though loan specifics aren't being released, industry experts say floating-rate loans for comparable properties are typically based on six-month Libor, with basis points pushing 350 and a loan to value of 75% to 80%. Scott McPherson and Eric Inabinet with Capital Advisory Group in Phoenix arranged the loan. Equity financing was provided by InSymphony Private Capital's Phoenix office.