Phoenix—TruAmerica has made its most significant investment in Arizona, by acquiring the 644-unit Scottsdale Springs, an institutional-quality multifamily property in downtown Scottsdale. TruAmerica acquired the property from New York-based Abacus Capital Group in an $80.9 million off-market transaction.
One of the few low-density multifamily settings in Scottsdale, the 36-year-old Scottsdale Springs offers one-, two- and three-bedroom apartments ranging from 680 to 1,440 square feet. Among the common-area amenities of the property are three resort-style pools, dog park, clubhouse, outdoor kitchens and barbecue areas.
An additional $10 million will be invested by TruAmerica in a wholesale renovation program to transform Scottsdale Springs into a luxury apartment community remaining affordable for working-class families and individuals.
Why did TruAmerica officials think this was a good acquisition opportunity? “We believe the location to be irreplaceable, next to downtown Scottsdale, and the difference in rents between class B and class A rents is significant here,” Greg Campbell, TruAmerica senior managing director of acquisitions and dispositions, told MHN. “As we renovate the units and build new, class A amenities, we feel that we [will] be the property of choice for value-seeking renters in the submarket.”
TruAmerica’s in-house construction management team will oversee enhancements to include interior upgrades to all residential units, the construction of a highly-amenitized clubhouse with modern fitness center, media and business center as well as a new rooftop lounge overlooking a re-designed resort-style pool.
“Scottsdale Springs features some of the lowest rents in downtown Scottsdale, and presents a truly unique opportunity to dramatically increase net operating income through interior and common-area improvements,” said Sean Cunningham, who with Tyler Anderson, both of CBRE’s Phoenix office, negotiated the transaction on behalf of the seller. “Additionally, downtown Scottsdale is substantially built out with minimal sites available for future multifamily development.”
Added Campbell: “Unlike many of the other major Western markets, Phoenix is still in the prime of its post-recession economic growth.
“Phoenix is forecasted to lead the nation in job growth over the coming years and is further aided by the growing demand by Millennials to target Sunbelt markets. Downtown Scottsdale is Phoenix’s strongest submarket, and is emerging as one of the most dynamic technology employment markets in the Western United States. Consequently, we continue to seek out sound investment opportunities here.”
Scottsdale Springs is Los Angeles-based TruAmerica’s third acquisition in Arizona in the past three-quarters of a year. The company’s Grand Canyon State portfolio now totals almost 1,600 multifamily units in Phoenix and Chandler.
TruAmerica has invested approximately $225 million in Arizona in the past two years.