TUCSON-Continuing its bullish investment in the state, S-J Management LLC has bought the 238-unit Bear Canyon Apartments for $30 million from Second City Capital Partners of Vancouver, BC. The off-market deal has closed one month after a deed in lieu of foreclosure take-back.
Art Wadlund, a partner in Hendricks & Partners' Tucson office, says the deal for the 95%-leased complex at 9055 E. Catalina Hwy. was taken straight to Michael J. Sauter, CEO for S-J Management, due to his interest in Arizona multifamily properties. "We thought he'd be interested and he was so he bought it," says Wadlund, who brokered the off-market transaction on behalf of Second City.
Bear Canyon was acquired in 2004 by an Omaha partnership that planned to convert the class A apartments into condominiums and sold just three months ago to a Denver-based partnership. Then, Second City Capital Partners did a deed in lieu of foreclosure. "The deed simply streamlined the process and meant we could move on with the property," Wadlund tells GlobeSt.com.
Sauter is planning a $750,000 renovation of the 10-year-old complex. He says the upside is the ability to raise rents $50 to $100 across the board. Upgrades will include exterior paint, unit reconditioning and cabana and landscape improvements. "The location's great, but rents are way below market," he says.
Bear Canyon's one-, two- and three-bedroom apartments, measuring from 792 sf to 1,222 sf, rent for $871 to $1,030 per month. S-J obtained a $27-million loan at a 7.5% interest rate to help finance the purchase.
S-J Management has another Tucson property under contract for $34.65 million. The 304-unit Retreat at Speedway at 7401 E. Speedway Blvd. is scheduled to trade in mid-July. Retreat at Speedway is about 3.5 miles southwest of Bear Canyon Apartments.
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