SAM Residential Group Buys Value-Add Apartment Deal in Arizona

Los Angeles-based SAM Residential Group has acquired 1408 Casitas at Palm Valley, a 168-unit apartment property in Avondale, a submarket of Phoenix, for $36 million from 29^th Street Capital. The deal is a value-add play for the investor.

1408 Casitas at Palm Valley was built in 1984 as a low-density apartment community with casita and townhouse-style homes. The property has one-, two- and three-bedroom floor plans with private patios and yards, faux hardwood floors, full-size washers and dryers, outdoor storage and skylights in every unit. The property also features a full amenity suite with a new fitness center, fire pit, swimming pool, dog park, a playground and a resident lounge.

The Phoenix multifamily market has performed phenomenally through the pandemic, earning a place as one of the hotspots in the US for multifamily investment last year. But, the pandemic merely accelerated growth in the already popular market. Since 2009, Phoenix investors have closed $42 billion in apartment investment sales. During that time, prices on multifamily increased 156%. Affordability is a key driver of growth, particularly in multifamily. Much of the inward population growth is driven by a more affordable quality of life.

The active investment market has continued through this year. SB Real Estate Partners, for example, sold two properties for a total of $100 million, and is adding an additional three assets to its portfolio already this year. SB Real Estate has acquired Bloom 24, a 114-unit garden-style apartment community for $34.2 million, and it has two additional properties under contract and scheduled to close in April. The firm has said it is taking a “aggressive investment approach in the Phoenix MSA” due to strong multifamily fundamentals. This includes population, job and local economic growth. Phoenix has been ranked as a top growth in the US, and in the years leading up to the pandemic had the highest rate of population growth in the nation.

Last year, the market also attracted new capital, like multifamily developer ZOM Living, which entered the Phoenix market in February 2021. The firm plans to invest $500 million in the market and build more than 1,600 units in North Phoenix, Scottsdale and the Biltmore District. Among the properties under construction, the firm is building One in Desert Ridge/North Phoenix, which will accommodate 600 units; another in Downtown Scottsdale, where ZOM will build nearly 750 units; and a parcel in Biltmore District for the development of 300 units.

In the SAM deal, Newmark senior managing directors Brett Polachek and Chris Canter and executive managing director Brad Goff represented the seller, and vice chairmen Kevin Mignogna and Charlie Haggard and vice president Peter Griesinger of Newmark’s debt and structured finance team helped secure the acquisition financing.