Preferred Capital Scores Two-for-One Apartment Deal

TEMPE, AZ-A Washington State-based partnership has picked up two apartment communities in one purchase deal totaling nearly $4.5 million. Located close to Arizona State University, both assets stand in the heart of the city’s student rental market.”The seller was very difficult in the contract theywanted to use. It’s a deal people have been trying tobroker for 20 years,” John Kobierowski, an associate partner at Hendricks & Partners in Phoenix, tells GlobeSt.com. “It’s definitely one of the most difficult deals I’ve ever done.”In this latest transaction, both properties were placed onthe market last December and escrow lasted 90 days. Atleast two other buyers had previously arrived at thecontract stage with the seller before either beingrejected or backing out altogether, Kobierowski says. Buyer Preferred Capital Corp. of Enumclaw, WA obtained financing from Irwin Union Bank of Columbus, IN at 80% loan-to-cost. The bank additionally agreed to fund 80% of the buyer’s planned renovations, which are extensive. Plans include new cooling systems, parking upgrades and an entire exterior paint job. The new owner also intends to make the individual units more student friendly, including installation of high-speed Internet access.Built in 1968, Bali Lanai consists of 62 units among four two-story buildings; while the circa 1968 Palm Villa, located directly across the street, has 48 units among three buildings. The one- and two-bedroom units rent for an average $630 per month.The seller, Shapiro Family LP of Paradise Valley, had owned both communities and essentially operated them as one entity for more than 30 years. Bali Lanai and Palm Villa are the closest cluster of multifamily properties to Arizona State University, saysKobierowski. Eight units were vacant prior to closing.Kobierowski, Greg Thielen and Charles LaBenz of Hendricks & Partners handled the purchase deal on behalf of both parties.