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Multifamily Bankruptcy Auction Fetches $19M

CHANDLER, AZ-A California private equity firm outbids five other investors eyeing the 234-unit Stonegate Village Apartments. Closing at a 6.73% cap rate, the return will come when steep concessions burn off for the 92%-occupied, class A development.

By Lee Simmons | Updated on June 02, 2004

CHANDLER, AZ-A private equity firm based in Irvine, CA, has emerged as the winning bidder in a bankruptcy auction of the 234-unit Stonegate Village Apartments. The buyer’s offer of $18.9 million beat out five other qualified bids for the class A property.

Marking its first multifamily acquisition in Phoenix, the Bascom Group LLC purchased Stonegate Village at 2225 W. Frye Rd. here from its developer, Stonegate Village Chandler Place Holdings LLC of Dallas. “They plan on putting money back into that property via exterior and interior improvements, raising rents and reducing concessions,” Brad Goff, a vice president in Phoenix for Dallas-based Trammell Crow Co., tells GlobeSt.com.

By Phoenix-area market standards, the 92%-occupied Stonegate Village’s concessions were rather steep–one month free on a six-month lease; two months free on a one-year lease; and three months free on an 18-month lease for some units, according to Goff.Bascom obtained a three-year, $15.4-million bridge loan from Dallas-based DL Babson & Co., a member of the MassMutual Financial Group, at a floating rate of 2.25% over Libor. George Smith Partners Inc. of Los Angeles arranged the financing. MEB Management of Phoenix has been tapped to provide management and renovation services for the five-year-old complex.

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