It appears (anecdotally) that multi-family transactions in Phoenix metro are picking up steam. Co-Star noted three transactions within the last week. Fairfield Residential sold Skyview Ranch in Gilbert to Mid-American Apartments, a Tennessee-based REIT for $17.5 million - or about $75,000 per door. Shallendor LLC sold The Reach in Tempe to TFSG Holdings for $3 million - or about $53,600 per door - in a short sale transaction. And ESI Ventures purchased Redwood Place in Phoenix for $5.8 million - or $31,200 per door. Earlier in June, Orion Residential completed a significant purchase of the remaining Citi on Camelback condos in a stalled condo conversion for $12.4 million - or about $70,000 per door.
I am also seeing increased activity in multi-family in my law practice as more eager buyers are scouring the area looking for distressed properties with enough cash flow to pencil out.
Inevitably, banks are involved in these deals.
As multi-family rents fall through the floor, both broken condominium conversions (that are typically still being rented as apartments) and apartment complexes aren't bringing in enough cash to service their debt - leaving banks with the tough decision on whether to put the complex in default and foreclose. Banks these days generally do not want to own (and have to manage) distressed real estate - particularly when they have to deal with residential tenants. So, like single-family homes before them, many of these properties are turning into "short sale" opportunities with banks forgiving portions of the loans to try to lure more creditworthy and financially stable buyers to put in some new equity and take over these distressed properties.
With many feeling that the residential market will finally bottom sometime this year and office/retail still falling off a cliff, it seems that buyers have decided it is a safer bet to start putting their money to work in the multi-family arena. No doubt there will be plenty of prime multi-family assets to pick up at cut-rate prices over the next six months to a year.
I am also seeing increased activity in multi-family in my law practice as more eager buyers are scouring the area looking for distressed properties with enough cash flow to pencil out.
Inevitably, banks are involved in these deals.
As multi-family rents fall through the floor, both broken condominium conversions (that are typically still being rented as apartments) and apartment complexes aren't bringing in enough cash to service their debt - leaving banks with the tough decision on whether to put the complex in default and foreclose. Banks these days generally do not want to own (and have to manage) distressed real estate - particularly when they have to deal with residential tenants. So, like single-family homes before them, many of these properties are turning into "short sale" opportunities with banks forgiving portions of the loans to try to lure more creditworthy and financially stable buyers to put in some new equity and take over these distressed properties.
With many feeling that the residential market will finally bottom sometime this year and office/retail still falling off a cliff, it seems that buyers have decided it is a safer bet to start putting their money to work in the multi-family arena. No doubt there will be plenty of prime multi-family assets to pick up at cut-rate prices over the next six months to a year.
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