Lieb Gets Quality Inn Site for a Steal

PHOENIX-A property adjoining the Phoenix Art Museum that had been slated for development of a high-end apartment complex has sold to a new owner for a fraction of its original asking price. A company formed by local investor Michael Lieb paid $3.2 million in cash to acquire the 48-room Quality Inn & Suites hotel at 1627 N. Alvarado Rd. and a neighboring 30,000-square-foot office building at 202 E. McDowell Rd.

Phoenix-based Alliance Residential Co. previously had the property under contract with seller Phoenix-based San Juan Sun Valley Inc. for more than $11 million. It intended to demolish the existing structures and replace them with a 290-unit apartment project. Though it succeeded in getting the property rezoned, the company withdrew from the project before beginning work. Lieb, president of Michael A. Lieb Ltd., acquired the property after Alliance pulled out due to inability to get financing for the proposed project.

The property is located within an official redevelopment zone, making any project developed on the site potentially eligible for tax abatements. But rather than trying to push a new project through during a period of economic retrenchment, Lieb plans to hold the property till the economy settles and the area’s real estate market rebounds. He says the deal’s approximately 8% cap rate allows him to make money on the current uses. The previous price, he adds, reflected the site’s development potential rather than existing use. With redevelopment off the plate due to the credit crisis, the seller had little choice but to reduce the price.