PHOENIX—The Praedium Group, a New York City-based nationalreal estate investment firm, purchased Adobe Ridge Apartments in Phoenix for $26 million. Praedium purchased the 224-unit, Class A complex, located along Highway 101 in northern Phoenix, from a private investor.
“Adobe Ridge is a high quality multifamily asset in the Phoenix market, which is still in the early stages of recovering from the financial crisis. Phoenix is one of the only markets in the nation where you can buy below peak prices” Asim Hamid, director of The Praedium Group, tells GlobeSt.com. “During the downturn, employment fell dramatically in this market, but in 2013 we saw job growth in the Phoenix area surpass the national average and we expect this trend to continue. With recent employment gains in Phoenix, demand has improved while additions to supply remain below the historical average.”
Hamid believes there is substantial upside potential through the implementation of a number of capital investment and management initiatives to better position the property in the Phoenix marketplace. For example, the company plans to upgrade the clubhouse, fitness center, leasing center, swimming pool, signage and landscaping.
Built in 2005, Adobe Ridge features a mix of one- two and three-bedroom apartments with an average size of 957 square feet. The apartments have nine-foot ceilings, kitchen islands, with top-of-the-line appliances, full size washer/dryers, patios and balconies, and walk-in closets. Amenities include a fitness center, clubhouse with kitchenette, business center, poolside cabanas with BBQs and a gated parking lot with 417 covered and uncovered parking spots.
Adobe Ridge benefits from its proximity to the Deer Valley Employment Center and the Arrowhead Towne Center, the only enclosed mall on the west side of Phoenix. The Arrowhead Towne Center is a 1.2 million square-foot mall anchored by Macy's, Dillard's, JCPenney, Sears, and AMC. The 101 freeway provides residents quick access to major employment nodes with a short, ten to fifteen minute commute. The Deer Valley and North I-17 corridor for example includes over 12.4 million square feet high-quality office space that is home to a number of major companies including PetSmart Headquarters, Discover, American Express, Best Western, Honeywell, Alcatel Lucent, Cox Communications, Suntron Headquarters, and Karsten Manufacturing Headquarters.
“We like the submarket,” says Hamid. “There are tons of jobs and here we are not competing with new properties. Current rents do not justify new construction. Rents would have to grow quite a bit for that justification. This type of acquisition definitely fits our target market and we will be seeking out more of the same.”
CB Richard Ellis arranged the financing for the transaction. Institutional Property Advisors represented the seller in the negotiations.
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