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04/08/2008 |
| STERLING AMERICAN WINS 832 UNITS FOR $85M PLUS |
| By Amy Wolff Sorter |
Sterling American Property Inc. has walked away with the 832-unit Deer Valley Villages, paying $85.2 million to SCI Real Estate Investments and beating eight offers to win the deal. The new owner plans to put $2 million into upgrades to bring the 12-year-old phase one up to class A status with its eight-year-old phase two.
Tyler Anderson, vice chairman in CB Richard Ellis\' Phoenix office, tells GlobeSt.com that the New York City-based Sterling American offered the top price for the 93%-leased complex at 3010 W. Yorkshire Dr. and provided certainty of close. He says the seller received offers from private companies and strong regional and national operators with access to capital.
Deer Valley Villages, situated on 43.2 acres, has one-, two- and three-bedroom units, measuring from 658 sf to 1,293 sf. The in-place rents are $735 to $1,155 per unit. Tyler says the renovation will be leveled at the 496-unit phase one.
Deer Valley Villages was brought to market at a $96-million ask. Anderson says the final price reflects a realistic adjustment in response to the capital markets. \"On our calculations, we see this as a five cap rate--and $102,000 a door is certainly below replacement costs,\" he says. \"The seller still made a lot of money and the buyer ended up making a buy that reflects today\'s underwriting.\"
The Los Angeles-based SCI acquired the complex in late 2004 from Archstone-Smith of Denver in what was then considered an area record-breaking price of $71 million. Anderson says this was the only one of SCI\'s holdings in the metro that\'s been put on the market.
\"This is on the north side of Phoenix and everyone points to it because there\'s a lot of great employment there,\" explains Anderson, who partnered with CBRE vice chairman Sean Cunningham on behalf of the seller. \"It\'s the \'Main and Main\' of the area, at the intersection of I-17 and the 101.\" Anderson adds that Sterling, which has other commercial holdings in the area, is on the lookout for more multifamily properties to acquire.
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