Thomas Christensen and Craig Haskell, who do business as 3 Street Financial LLC, spent $15.85 million for Quail Point Apartments, a 264-unit complex at 3045 N. 67th Ave. in West Phoenix, and will invest another $1.8 million into upgrades. "We feel the Hispanic market is underserved," Christensen tells GlobeSt.com. "We're doing something nobody else does. We're looking at the specific needs and preferences of this market and creating projects to appeal to it. We've seen it work in senior housing and student housing, but apart from government subsidized housing, we think we're the first doing it for a minority market."
To cater to the Hispanic community, 3 Street revamps the properties to include a soccer field, playground and community center in the common areas and installs tile flooring in all units. In addition, it provides free English classes for all residents and a children's after-school program. To provide teachers, it offers free rent and $400 monthly stipends to students from a local theological seminary.
At Quail Point, the company has budgeted about $7,000 per unit to install tiling, repaint and repair the exterior and convert a tennis court to a soccer field and a squash court to a community center. The partners contracted MEB Management Services Inc., a local firm, to manage the complex and hired a "lifestyle coordinator" to oversee the program component.
According to Christensen, the cost of the alterations and programs requires careful attention to pricing. He estimates monthly rents for the 20-year-old, class B property run about $100 per sf below the market average. He says rents will be raised to market level after the completion of improvements, which will take about a year.
The complex has 119 one-bedroom units and 145 two-bedroom units, with rents ranging from $545 to $696 per month. It was slightly more than 90% leased at sale time.
The seller of Quail Point, Phoenix-based New Castle Investments LLC, acquired the property in June 2007 for $15 million. Michael Hubl, a senior investment associate with Marcus & Millichap in Phoenix, who with fellow Marcus & Millichap investment associate Ryan Ash represented both parties in the transaction, would not comment on the reasons for the quick turnaround, but he mentions he and Ash are also marketing another Phoenix apartment property for the same seller. Hubl and Ash brought 3 Street and New Castle together in an off-market deal.
The investors' previous purchases, also in Glendale, included the 156-unit Veranda Apartments at 5704 W. Thomas Rd. and 103-unit Windtree Village at 6041 W. Thomas Rd. Christensen says he and Haskell conservatively expect to build a portfolio of 2,000 units over the next two years. All will be targeted to the Hispanic community and eventually branded under the name Z Villas. He reports they are looking at additional properties in Mesa and are also scouting California's Inland Empire and Las Vegas for opportunities.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
