"People are flocking to Arizona because the economy is improving and the population is increasing," Iuliana Vaughn, vice president of Sperry Van Ness, tells GlobeSt.com. "There are so many positives that Arizona is truthfully one of the best places to invest."
Vaughn says three of the five buyers were private investors from California looking for increased cash flow. "Arizona is doing so well due to the high prices in California," she explains. "You can sell a four-plex in California and buy 20 to 50 units in Arizona for less."
Sellers are eager to take advantage of the hot market where cap rates have come down from 8.5% in 2002 to 6% today, Vaughn says. Cap rates for the just-sold properties ranged from 4.1% to 6.9% while occupancies at closing ran from 65% to 97%.
Vaughn points out all properties were very aggressively priced, making it difficult to obtain financing. "A lot of the properties were not cash flowing properly and the NOI was a bit low because of concessions and high vacancy," she says.
For example, the Raven, a 159-unit, class A development at 3434 E. Baseline Rd., traded at a 4.7% cap rate to locally based Professional Properties Investments LLC. The property was sold for $10.7 million or $66,563 per unit. Vaughn and Neil Sherman, also of Sperry Van Ness, brokered the deal.
Similarly, Professional Properties Investments sold Desert Springs Apartments, a class B property, for $6.5 million to Daymond and Maria Bouet of Bonsall, CA. The cap rate for the 135-unit community was 6.8%. Vaughn represented the buyer and the seller.
Hunters Glen, a 264-unit, class A complex at 2601 W. Claremont St., brought $10.7 million from the nonprofit, Community Services of Arizona, for locally based HGA Apartments. Vaughn and Bill Hahn, also of Sperry Van Ness, shared brokerage responsibilities.
The Pinewood Village, a 93-unit, class C property was acquired for $3.6 million by Jerry & Tracey Scanlin of Southern California from Phoenix-based D&G Associates. Kevin Hanford of Sperry Van Ness assisted Vaughn in the sale.
Sun Ray Apartments, a 28-unit, class B property traded for $1.4 million, passing from locally based Adams Family Trust to Gregory and Virginia Griffin of Southern California. Vaughn and Sperry Van Ness' Eddie Chang brokered the deal.
Vaughn says all of the buyers are planning to reposition the assets. "The new owners are expecting occupancy and rents to go up and cash flows will be positive," she says.
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