The Boston-based AEW Capital outbid 15 others to claim title to the 14-year-old complex at 15255 N. Frank Lloyd Wright Blvd. in Scottsdale, says Brad Goff, a vice president with Trammell Crow Co. "I thought the Highlands would trade to a condo converter because they've been the highest offers on previous transactions," he tells GlobeSt.com. "But AEW came in with the highest offer." The pension fund adviser plans to continue to operate the Highlands as a rental property.
The 13.3-acre Highlands consists of 82 one-bedroom units, ranging from 763 sf to 863 sf; 156 two-bedroom units, 1,025 sf to 1,090 sf; and 34 three-bedroom apartments with 1,257 sf. The average unit is 1,004 sf. The average rent is 85 cents per sf or $851 per month. The property was 96% occupied at closing.
According to Goff, the Highlands is one of the older properties in northeast Scottsdale. AEW Capital plans to invest roughly $250,000 into renovations, including landscaping and painting.
"There's quite a bit of upside in the deal," Goff says, pointing out 25% of the area's rental housing is being converted to condos. "That is going to create a supply constraint," he predicts, "and there's no new development. That means you can push rents."
AEW Capital, which acquired the Highlands in an all-cash deal, owns several other complexes in the Valley. In 2004, it teamed with Crown Pacific Properties on the acquisition of Lakefront at West Bay, Landmark Towers, Portofino and Sunscape Apartments. After the disposition of the Highlands, Sentinel owns 11 properties totaling 3,500 units in the Valley.
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