(Read more on the multifamily market.)

TUCSON-A Seattle-based investment and management company has picked up its second Tucson multifamily property in a month. In an off-market deal, S-J Management LLC formed the investment group Speedway Property Holdings LLC to acquire the 304-unit Retreat at Speedway for $34.65 million.

In mid June, S-J bought the 238-unit Bear Canyon Apartments at 9055 E. Catalina Hwy. from Second City Capital Partners of Vancouver, BC for $30 million. That deal was also off market. The new purchase brings the buyer’s Tucson holdings to 978 units.

The current deal for the 94%-leased complex at 7401 E. Speedway Blvd. was brokered by Rue Bax and Doug Lazovick, partners at ICC Real Estate LLC in Scottsdale, who represented both S-J and seller Simjah Interests LLC, a Houston-based company with no other properties in the market.

According to Bax, strong rental growth in Tucson has generated a high excitement level for investors. “For years the market hadn’t seen strong rental growth and now it’s starting to turn the corner,” he says. “It’s helped that there’s not a lot of new construction.”

Bax reports the seller bought the 10-acre asset in 2003 for $23 million with the intention of taking it condo. But the condo market has fallen apart in the past year, prompting many converters to leave the area.

“The buyer got a very good price point,” states Bax, who says Lazovick brought the parties together. “The seller was very excited because they’re not moving forward with the conversion and wanted to get out.”

According to Bax, Tucson is drawing the attention of a lot of investors because of strong underlying fundamentals. “Rental growth is driving prices up and there’s quite a bit of buying activity,” he says.

The 26-building Speedway complex was completed in 2002. It has 160 one-bedroom, one-bath units and 144 two-bedroom, two-bath units with monthly rents from $680 to $865. The gated community includes a 24-hour fitness center, business office, heated resort-style pool, large floor plans, covered parking and outside storage for tenants. Financing was provided through Steve Posluszny of ICC affiliate Intercon Commercial Capital LLC.

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