Repositioning Yields $15M for 269-Unit Asset

MESA, AZ-Drawing a close to a two-year hold, a partnership from Canada has sold the 269-unit Quail Creek Apartments for $15.45 million. The seller had put $500,000 into upgrades, but the new owner is planning to invest significantly more.

"They had 80 down units that were missing appliances and had holes in the wall so they repaired it and brought it up to speed and now have 100% rent-ready units," says Kevin Hanford, senior adviser with Sperry Van Ness' Phoenix office, who brokered the transaction. He tells GlobeSt.com that Holt Homes of Vancouver also boosted the occupancy of the complex at 1651 S. Dobson Rd. from 60% to 90% during its two-year hold. Holt had acquired the property in April 2005 for $10.1 million.

Hanford says it had been the seller's goal all along to buy the complex, fix it up and then re-sell it. Though they'd considered holding it awhile longer, he says market conditions encouraged them to find a buyer. Julie Vaughn, a Sperry Van Ness senior vice president, was Hanford's partner for the sale.

Quail Creek ended up in the hands of San Francisco-based Portico Properties, which beat out four other offers. Hanford says Portico has a strong track record with an experience in rehabbing and repositioning B and C properties.

"They're planning on investing significant funds into a capital rehab of this property to include interior and exteriors," Hanford says. "They're also looking for similar types of properties in the area."

Built in 1979, Quail Creek Apartments has studios and one-, two- and three-bedroom units. Units range from 380 sf to 1,013 sf. Rents are between $470 and $810 per month.

Portico Properties is gradually building a value-add portfolio in the region. It also owns the 147-unit Carriage House at 1010 E. Orange St. in Tempe and 29-unit Cottages on Hayward at 2021 W. Hayward Ave. in Phoenix.