SCOTTSDALE, AZ-In the wake of the condo slowdown, Alliance Residential Co. has acquired 660 units through separate off-market transactions. The 330-unit Foothills Apartments and 330-unit Joshua Tree Apartments, which were planned for condo conversions just a year ago, will be returned to the rental pool following extensive multimillion-dollar renovations.
The buyer isn't saying how much it paid for the deeds. But, John Cunningham, Alliance's managing director of acquisitions, says similar properties in the submarket have traded for $200,000 per door. "We're significantly below that number," he tells GlobeSt.com.
Cunningham says his company has close relationships with Foothills' seller Oculus Development LLC of Chicago and SunVest Communities LLC, the Hallendale, FL company that owned Joshua Tree. When the market for condominiums slowed, Alliance decided to take the opportunity to reposition both assets through an 18- to 36-month capital improvement plan. Steve Goldstein with local Americon Realty Services Inc. represented both sellers.
"The location of both assets was very good," Cunningham says. "The submarket has an extremely high barrier of entry for new construction. The underlying appeal is that both of these have gone through the process of being mapped to go condo if that market ever picks up."
Cunningham says there also is some upside potential with the rents because current rates are $125 to $200 per unit below market. Joshua Tree's occupancy is above 80%; Foothills is substantially lower. "This represents an opportunity to come in and accelerate the renovation program without the challenge of having existing occupied units," he explains.
Joshua Tree Apartments at 11545 N. Frank Lloyd Wright Blvd. will be called Broadstone Oncala. Situated on more than 13 acres, the 22-building complex has one- and two-bedrooms ranging from 868 sf to 942 sf. Current monthly rents are $660 to $845.
Foothills Apartments will be renamed Broadstone Scottsdale Horizon. Located at 9259 E. Raintree Rd., the 30-building property contains one- and two-bedroom units from 765 sf to 1,006 sf. The rents go from $789 to $837 per month.
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