Hahn, Sherman & Koskovich Negotiate MF Deals Totaling Just Under $7M

PHOENIX-During the past month, the Colliers International team of Hahn, Sherman & Koskovich has closed five separate transactions locally and in Tucson totaling $6.7 million. According to the team’s Trevor Koskovich and Jeff Sherman, the closing of these and other troubled assets in the area during the past year signals that lenders and special servicers have got their systems in place to sell these assets.

The 128-unit Cheyenne Pointe in Phoenix; and the 84-unit Westmoreland Apartments, the 52-unit Casa Grande Village and the 53-unit Casa De Rosa Apartments in Tucson were brought to market by special servicers. Meanwhile, the 92-unit Brittany apartments was sold by a private entity. See below for transaction details.

“I think the various lenders in the marketplace have figured out how to go about foreclosing, listing assets and selling them,” explains Trevor Koskovich, who joins forces with partners Jeff Sherman and Bill Hahn to list, market and sell class B and class C multifamily properties. “They’ve spent the past two years getting the systems in place,” he adds. “Now that they’re in place, the sales process has become easier.”

In the weeks and months following the late 2008 financial crisis, predictions were that masses of foreclosed multifamily and other assets would hit the market, depressing values and creating a glut of inventory. In Phoenix, especially, concerns also existed about the so-called “shadow market” – i.e., foreclosed single family homes being put into the rental pool. These shadow rentals, it was believed, would further lower rental demands and continue to depress multifamily asset values.

More than three years after the crisis, however, the shadow market seems to have remained in the shadows – masses of single family rentals didn’t ever really flood the market. Furthermore, Sherman and Koskovich tell GlobeSt.com that a lot of foreclosed and troubled class B and C assets didn’t hit the market until late 2009, and by the time they hit, it seemed as though everyone was ready for it.

Lenders spent much of 2010 disposing of these assets and “from a transaction and pricing perspective, we hit the bottom of foreclosed properties about six to nine months ago,” Sherman says. “We aren’t seeing it move upward any more, but we aren’t seeing further decline, either.”

He goes on to say that, while 85% of class B and C asset sales in Phoenix could be attributed to foreclosures in 2011, “we’re estimating these sales next year to be around 30% to 40%. Most of that inventory has burned off.”

Koskovich and Sherman believe that, while REO sales will taper off in 2012, transaction volume involving smaller class B and class C assets will continue to grow. One reason is that buyers who acquired troubled assets in 2009 and 2010 have fixed them up and will be ready to sell them in 2012 and 2013.

Furthermore, “we’re going into three peak years of multifamily maturities,” Koskovich explains. “We’ll be hitting situations in which the owners are in positions to sell their properties and pay off their loans.” The only other alternative in such situations is to refinance, and “to do that, the sellers would have to bring a couple million to the table,” Koskovich adds.

Transactions Closed by Hahn, Sherman & Koskovich

Brittany Apartments, 708 N. Country Club Dr., Mesa, AZ
Number of Units:  92
Sales Price:  $1.9 million
Price per Unit:  $20,652
Buyer:  Good Environment LLC, Phoenix
Seller:  Summit Equity Investments Inc., Los Angeles

Cheyenne Pointe, 11850 N. 19th Ave., Phoenix
Number of Units:  128
Sales Price:  $1.6 million
Price per Unit:  $12,500
Buyer:  Paying Cash for homes LLC, Phoenix
Seller:  Wilson Property Services (court-appointed Receiver), Phoenix

Casa De Rosa Apartments
Number of Units:  53
Sales Price:  $848,000
Price per Unit:  $16,000
Buyer:  CCI LLC, Phoenix
Seller:  Strategic Property Services (court-appointed receiver), Rancho Santa Margarita, CA

Casa Grande Village, 5950 S. Park Ave., Tucson
Westmoreland Apartments, 1335 and 1341 W. St. Mary’s Rd., Tucson
Number of Units (combined):  136
Sales Price (Combined):  $2.3 million
Price per Unit:  $17,250
Buyer:  Conix Inc., Tucson
Seller:  Trimont Real Estate Advisors Inc. (on behalf of Fannie Mae), Atlanta, GA