402-Unit Owner Banks $34M From Two-Year Hold

TEMPE, AZ-Two years after its acquisition, the 402-unit Willow Creek Apartments has brought $34.09 million for a California seller, who paid $20.39 million for it and pumped more than $500,000 into upgrades.

Brandon Broll, vice president for Bronco RE Corp. of San Rafael, CA says they sold the class B complex at 2020 E. Broadway Rd. to Acacia Capital Partners in Palo Alto, CA because it had exceeded appreciation expectations. "We were hoping to get the value in, then get the rents bumped up and have a nice cash flow going forward," he says. "We had a quick run-up in appreciation for our investors so we believed the best strategy was to sell, then redeploy the funds into other assets."

Broll says Bronco is seeking exchange properties through off-market deals with Willow Creek proceeds. The target markets are Phoenix and the West Coast.

Broll tells GlobeSt.com that when Bronco RE bought Willow Creek in September 2005, it had been on the market close to two years because it was carrying an assumable loan with a high prepayment penalty. He says the penalty didn't bother Bronco, however.

"We came from a California culture, which was high on the condo craze at the time," Broll explains. "People were paying off loans in the millions of dollars. This prepayment was pretty small, compared to what we were used to." He adds that Bronco paid off the old loan, then took out new financing, but declined to go into specifics.

Marc Huisken and Casey Davis with Grubb & Ellis/BRE Commercial LLC's office in Phoenix had the listing for the 24-year-old Willow Creek, situated on 17.88 acres. The complex is made up of studios, one- and two-bedroom units. The 405-sf studios rent for $613 per month. The one-bedroom apartments, ranging from 630 sf to 650 sf, cost $655 to $740 per month. Two-bedroom units, measuring 850 sf to 900 sf, rent for $827 to $973 per month.