The 276-unit, class B community at 1711 S. Extension Rd. in Mesa is McDowell Properties' second acquisition in the Valley since November when it acquired Somerset Villa Apartments at 909 W. Colter St. in Phoenix for $15 million. Kim Bernard and Lamont Bawden of Phoenix-based Bernard/Allison Investment Services Inc. brought McDowell Properties and Newport Beach, CA-based Pacific Life together, says Patrick McDowell, president of McDowell Properties.
"Bernard/Allison, which has managed Tierra del Sol for 10 years, also manages Somerset Villa Apartments for us,"McDowell tells GlobeSt.com, "and they thought that we might be interested in acquiring Tierra del Sol."
Unlike Somerset Villa, Tierra del Sol is a not a value-add investment. However, McDowell Properties plans to invest $300,000 to $400,000 to "keep it on the leading edge." The complex, built in the 1990s, is 92% occupied. "The occupancy is very strong compared to the rest of the market," McDowell says.
McDowell believes Tierra del Sol is the best asset in its class in the city due to its infill location and large units. The complex has a mix of 94 one-bedroom units and 182 two-bedroom units. The average unit is 942 sf. Monthly rents range from $640 to $780.
"As the market recovers and concessions recede, we think Tierra del Sol will be the strongest performer in Mesa," McDowell says. The complex now offers one month of free rent for one-bedroom units. Two days ago, rates went up for two-bedroom units.
The buyer secured a seven-year Freddie Mac loan with a floating rate interest from Wachovia Multifamily Capital Inc. The interest rate starts at 3.8% and caps at 6.1%, according to McDowell.
The Tierra del Sol acquisition takes the portfolio to 660 units. By year's end, McDowell Properties plans to purchase another 2,000 units in the Phoenix metro.
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