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PHOENIX-Despite a generally slow market for multifamily properties, a private California investor has put the Peaks at Papago Park, a 768-unit apartment complex on the block for $70 million. The seller is Peaks Papago LLC, whose general partner, Papago Properties Inc. of Santa Ana, CA, is headed by James Carter, developer of the exclusive South Coast Winery Resort & Spa in Temecula, CA.

According to Kevin Hanford, a vice president and senior adviser with the Phoenix office of Sperry Van Ness, the Peaks at Papago Park at 815 N. 52nd St., is the sixth largest multifamily complex in the market and the largest one currently up for sale. He says Carter wants to use proceeds from the sale as equity to expand the resort. “He’s been focusing on that,” Hanford tells GlobeSt.com “This is a very large project to manage from out of state. It needs a company with a presence or building a presence in Phoenix.”

The project brochure describes the Peaks at Papago as a class A-minus asset in a class B-plus location. Hanford says the surrounding area is a high-growth employment area with several million sf of office and industrial space. “There’s going to be tremendous job growth once the economy revives,” he predicts. “This will be a very desirable place to live for the employees.” The complex is currently 80% rented, he adds.

Built in three phases from 1986 to 1996, the complex consists of one-, two- and three-bedroom units ranging from 580 sf to 1,152 sf. Monthly rents go from $722 to $1,208.

Hanford calls the property unique for Phoenix in terms of its amenities. “It’s like a little city, with a mini-mart, six swimming pools, an indoor driving range and racquetball courts. The unique thing about it is the size.” The project, which includes several creeks, ponds and jogging trails, adjoins the 1,200-acre Papago Park.

While acknowledging the challenges of bringing the property to market in the current credit climate, the Sperry Van Ness broker is confident it will get a positive reception. “It’s an absolutely gorgeous institutional quality property that will be of interest to institutional buyers and well-placed investors,” he says. “It’s a management play primarily, though there is a small amount of value-add appeal as well. The owner has done a lot in terms of improvements, but the first phase could use a little bit of renovation, with the opportunity to raise rents in those units.”

Hanford believes there will be no problem finding a buyer. “Certainly buyers are tentative, but there are still a lot of investors with equity to spend,” he says. In addition, he points out there is a possibility to assume an existing loan, adding he’s arranged an interest-only bridge loan through an undisclosed private source that could provide $47 million for three to five years. “The types of investors who buy projects like this have their own sources anyway,” he adds. The deal has a stabilized cap rate of 6.5%.

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