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PHOENIX-Setting up an off-market deal, a local investment firm has placed a $23.9-million contract on the 258-unit Monterra Apartments, bought just nine months ago. Owner S-J Management LLC is poised for a $5.7-million gain when the deal closes.
Building Management Services Inc. is expected to make the close in November for the class A complex at 1333 N. 24th St. The sale price provides a return on invested capital of 80% to 90%, according to Michael J. Sauter, CEO of S-J Management.
"The buyer has been looking for quality A projects for several months now and heard that we might consider a sale," Sauter tells GlobeSt.com. "The buyer made us an offer we couldn't refuse."
Seattle-based S-J Management acquired Monterra Apartments from Gray Development of Phoenix for $18.2 million. At the time of purchase, Sauter said S-J Management planned to hold onto the complex at least three years. "The ROI in such a short period of time is the motivating factor in selling the deal," he explains.
Built in 2001 on eight acres, the 96%-leased Monterra Apartments' mix has 30 studios, 75 one-, 75 two- and 78 three-bedroom units. The average unit is 803 sf; the average rent is $850 per month.
According to Sauter, S-J Management plans to deploy the proceeds into other deals in Phoenix. The company recently placed a $50.5-million contract on the one-year-old MonteViejo, a 480-unit, class A complex at 2220 E. Beardsley Rd. in the Desert Ridge area. S-J Management, which owns more than 2,500 units in Arizona and Washington, is set to close the sale by late summer.
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