21-Unit Unique Value-Add Investment
3601 North 5th Avenue | PHOENIX, AZ
SALES PRICE: $2,650,000
SELLER: Atrium Apartments LLC & Shorewood AZ LLC
BUYER: Park Slope Real Estate Holdings LLC
PRICE PER UNIT: $126,190
PRICE PER SQ. FT.: $127.04
YEAR BUILT: 1960
LOT SIZE SQ. FT.: 182,516
NET RENTABLE SQ. FT.: 45,540
FINANCING: Sabal TL1, LLC (Fannie Mae-Small Loan Program)
FIRST LOAN AMOUNT: $1,680,000
CLOSE OF ESCROW: 6/8/2016
SELLER PROFILE | TRANSACTION GOALS
This Selling Partnership consisted of two investors who took advantage of the market by purchasing an already upgraded asset in 2014 and adding washer and dryers to most units. They continued using highly efficient management and were able to charge top-of-the market rents in a high demand neighborhood. This 1960 constructed building was close to the popular downtown/midtown commercial and retail activity and the income collections were growing monthly. These highly sophisticated owners, who worked for a competing real estate company in the Portland market, hoped to experience a 40% IRR return, but weren’t sure they could achieve such a price in less than 24 months based on our competitor’s proposals.
BUYER PROFILE| TRANSACTION GOALS
This out-of-state 1031 Exchange Buyer was coming out of a small apartment disposition in Manhattan and was represented by a Marcus & Millichap team in our Brooklyn office. Since moving to Tucson, their goals were to purchase a high quality asset in an impeccable location and achieve stable cash flow. With the buyers demand for projects close to the popular Phoenix Light Rail project and its proximity to the exciting vitality of the Central Avenue corridor, this Buyer had to outshine competitive offers by becoming serious contenders to close. We referred them to our highest probability in-house mortgage broker who found an attractive 63% LTV lender; we decisively responded with aggressive seller terms which were promptly accepted. Closing probabilities were ensured with the Buyer’s willingness to pledge large amounts of pass through earnest deposit in escrow even though their down-leg transaction had not yet closed in New York City.
PROCESS AND RESULTS
Illustrating the importance of exclusive listings, we competed with the agents who sold the property to these out-of-state sellers. We clearly showed the ability to control the marketing process by differentiating our promotional collateral, taking advantage of aggressive market assumptions and allowing high buyer demand to quickly determine pricing levels. Our goal was to locate a highly motivated 1031 Exchange Buyer with a sizable down payment who had to make quick decisions. Ultimately, we had 3 offers represented by out-of-state Marcus & Millichap agents. Each party received accurate and timely data and were willing to compete for the seller’s acceptance and reward of opening escrow. We found that pricing the property and not prohibiting the buyers’ offers through separate Confidentiality Agreements or Due Diligence websites was advantageous to finding a buyer who understood the offering process and was willing to meet all the goals of the seller.