TUCSON-A 37-year-old student housing complex has been bought for a condominium conversion in an $11.5-million exchange. The San Diego-based Sand & Sea Equity is making its first play in the market with the acquisition, renaming the 88-unit Arizona Commons I to Campus Walk Condominiums.

WGA North Euclid Avenue LP is the seller of record for the handoff at 931 N. Euclid Ave., which is close to the university. The parents and students alike plus investors make up the target market, according to Robert Selby Brauchli, a multifamily investment sales specialist with Marcus & Millichap Real Estate Investment Brokerage Co. in San Diego. “There’s a high demand and low supply for this type of housing despite the softening overall of the condo conversion market in Tucson,” Brauchli tells GlobeSt.com.

Brauchli, the buyer’s broker, predicts that an increase in students combined with the university’s growth most likely will spur demand. The complex also is located in a historic area with older homes that investors are buying, renovating and renting to students. “Given the demand in that area and the limited supply available, this makes sense from an investment perspective,” Brauchli stresses.

Long Realty Co. of Tucson, which is handling unit sales, is already beginning to see some good interest, Brauchli continues. “With school having started around the closing, they began marketing to incoming students and parents,” he says, “and I imagine they’ll get a few dozen sales out of what they’ve already done.”

Brauchli explains the conversion will be a two-step process, with vacant units being initially upgraded. As leases expire on the occupied units, they’ll be renovated, though upgrade costs were not available. “The units are laid out well,” he adds. “They’re townhouse style, all 1,100 sf, two bedrooms with 1.5 baths and two bedrooms with two baths. They’ll work with conversion.”

Mike McClain with Marcus & Millichap’s Tucson office represented the San Diego-based seller in the sale. Richard Judge and Chad O’Connor, part of the brokerage house’s lending group in San Diego, arranged a $12-million, two-year adjustable-rate loan through a bridge lender. Brauchli says the financing was done at a 75% loan-to-value ratio.

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