PHOENIX-More than 20 years after going vertical with the 180-unit Paradise Foothills, a local developer has opted to sell the class B complex at a 5.5% cap rate. A Portland, OR investor, buying its third property in the area, has paid $16.4 million and plans an additional million-dollar upgrade of the complex's interiors and exteriors.
According to CB Richard Ellis vice chairman Sean Cunningham, the 93%-leased asset at 12231 N. 19th Ave. was put on the block because Picerne Development Corp. is divesting various class B assets from its portfolio. Paradise Hills is its last class B in the Phoenix metro. "They're repositioning that money into new construction in Phoenix and Las Vegas so this is a strategic move for Picerne," says Cunningham, who represented the seller with CBRE partner Tyler Anderson.
Cunningham says Picerne Development already had a working relationship with the buyer, Guardian Management LLC. Guardian acquired Picerne's River Ranch Apartments at 6152 W. Oakland St. in Chandler in August 2006. "The seller knew Guardian would perform. And, they were familiar with the market," Cunningham says, adding the comfort level is what allowed Guardian Management to outshine five other bids for the property.
Cunningham tells GlobeSt.com that once upgrades are complete, the asset could be brought up to class A-minus caliber, with a potential of $100-per-unit rent increases. Renovation on the complex will begin in the second quarter.
"Guardian is continuing to review properties and they'd like to acquire additional assets in Phoenix," Cunningham adds. "I'd anticipate them making several more purchases here in 2007."
Paradise Valley, built in 1985, is a mix of one- and two-bedroom units, ranging from 560 sf to 1,120 sf. Its rents go from $569 to $815 per month.
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