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FLAGSTAFF, AZ-In its first multifamily asset investment in the city, the Aspen Group has acquired the 372-unit Timberline Village Apartments for $25 million. The Phoenix buyer will invest an additional $4 million to convert 204 units into condominiums, with the balance rolling in 2008 in sync with a HUD loan expiration.

“The timing is good on this,” says Donald L. Meyers, president of the Aspen Group. “Hopefully by the time we’ll have sold the condominiums in the first phase, we can sweep right in and sell those other condos beginning in 2008.” The 4343 E. Soliere Ave. property is 94% leased.

Meyers tells GlobeSt.com that his company, now putting together a mixed-use project in the immediate area, was approached by the Seattle-based seller, Timberline II LP, about buying Timberline. He says he was receptive to the proposition because the city has a good quality of life yet lacks workforce housing. “The weather is good here, at least in the summer, and it’s close to Phoenix,” he adds. “This isn’t a class A Phoenix or Vegas condo play–67% of the tenants already there are pre-qualified to buy.”

Aspen dealt directly with the seller, using Scott McPherson and Eric Inabinet at Capital Advisory Group in Phoenix to arrange a $24.9-million acquisition and renovation loan with Tustin, CA-based Fremont Investment & Loan. Andrea Karp, a Fremont vice president and senior loan originator, says the financing has a three-year term with a variable rate of 3.5 basis points above Libor. “This was a difficult one to underwrite because there really have been no conversions in Flagstaff and only a limited amount of multifamily transactions,” she adds. “Comps were hard to find.”

The 94%-occupied complex was built in 1999 and 2001, a mix of one-, two- and three-bedroom units. The newer phase will be converted to condos first. It is projected that condos will be sold for $100,000 to $200,000.

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