Sunscape Apartments is the fourth investment that the partnership has made in the Valley. During 2004, the CPP and AEW Partners IV joint venture also acquired the 440-unit Portofino Apartments in Phoenix, the 255-unit Landmark Towers (formerly Camelback Towers) in the downtown and the 244-unit Lakefront at West Bay in Tempe. It now counts nearly 1,200 units in its Phoenix portfolio.
"We think that Phoenix is a market that has gone through a reset…It has experienced substantial job growth and we think it's a rebounding market," says Greg Henderson, executive vice president and COO of Crown Pacific. "Things have really begun to turn around and overall we're very pleased with the Phoenix market."
Located at 3500 N. Hayden Rd. near the Continental Golf Course, Sunscape Apartments is a 25-year-old, class B complex consisting of 37 two-story residential buildings situated on 18.9 acres. The property has an occupancy rate in the mid to low 90% range.
Apartments range from 700 sf to 980 sf. Rents average $735 per month. The complex features one- and two-bedroom units, some with dens and other designed as lofts. The property is located within walking distance of Old Town Scottsdale, home to numerous restaurants, galleries, upscale shops and boutiques and near the Scottsdale Fashion Square, a 1.8-million-sf regional mall.
"This is our first asset in Scottsdale," Henderson says. "It was one submarket that we liked a lot that we weren't in and we started focusing on it." He tells GlobeSt.com that the partnership found out Prometheus planned to sell Sunscape Apartments while it was working on closing the Portfofino deal with the company. "We were very lucky to find something so well located," he says.
Sunscape will undergo a $3.5-million rehabilitation. "We're going to push it to the high end and make it a B-plus property," Henderson says. In addition to exterior improvements including repainting the buildings, architectural enhancements and landscaping upgrades, the complex also will be outfitted with a movie theater, business center and upgraded fitness center.
The majority of the investment will go into the units. "We plan to spend about $5,000 on each unit," Henderson says. Interior improvements include adding granite countertops and crown molding, bathroom change-outs and new appliances and carpeting. Additionally, 190 units will get washers and dryers. Once the improvements are made, Henderson tells GlobeSt.com that the partnership plans to bump the rents an average of $150.
Crown Pacific Properties LLC and AEW Partners IV LP, which is opportunity investment fund managed by AEW Capital Management LP, will likely hold the property for three to five years with an IRR in the mid to upper teens, Henderson says.
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