MESA, AZ-Outbid by more than $700,000, a Los Angeles investment group still came out the winner in the quest for a 392-unit gated community when the seller accepted its $37.6-million offer on the class A property.

"We were a distant second," Scott Derrick, senior vice president of national acquisitions for the Los Angeles-based SCI Real Estate Investments, tells GlobeSt.com, referring to the fierce competition for Mesa's Stone Canyon Apartments at 5210 E. Hampton Ave. "But, the seller chose SCI because of their past record in Phoenix for closing deals." That record includes two other recent acquisitions, the $43.5-million Casa Paloma Shopping Center in Chandler and Deer Valley Village, which the firm picked up for $70.8 million.

The investment group's latest asset, comprised of 20 two- and three-story buildings on 25.2 acres, is scheduled to close in July. Derrick says Stone Canyon was particularly attractive because condo conversions have taken many of the area's rental properties off the market. As a result, he says existing properties are lucrative investments and more so when laden with amenities like Stone Canyon's mountain views, detached garages, resort-style swimming pools and spa, putting green, sports courts and fitness center.

"Things in the area are starting to tighten up," Derrick says, referring to the area's looming apartment shortage. "We looked at the pipeline and there are only two more (complexes) coming on the market, one for low income and the other that will be converted tocondominiums."

Derrick says the booming population, which increased 17% since 2000, is expected to grow another 20% in five years, making the firm's investment in the community even more attractive. He depicts Stone Canyon's Apartments as a steal when compared to the upside potential to increase rents and the current 94% occupancy rate. Derrick sat across the bargaining table from Tyler Anderson and Sean Cunningham with CB Richard Ellis Inc.'s Phoenix office, who represented the Chicago-based seller, Benj. E. Sherman & Sons Inc.