VIZZDA—May 21st, 2013 — Greystar continues to acquire and Equity Residential (EQR) continues to dispose of multi-family assets in Greater Phoenix, even after the former’s co-venture with Goldman Sachs closed its twenty seven-property portfolio sale and the latter completed its $11b acquisition of Archstone Enterprises. Acting through a non-traded REIT affiliate, Greystar Equity Partners VII, Joshua Carper and Robert Faith purchased the 328-unit Via Ventura Apartments from EQR for $36.5m or $111,280.49 per unit.
The 2-story complex is comprised of twenty-three buildings totaling 232,288 ft2 built as three separate developments beginning in 1977 with seven buildings totaling 70,307 ft2, followed by eleven buildings totaling 166,301 ft2 in 1979 and culminating with five buildings totaling 45,680 ft2 in 1985. It is located at the southwest corner of Hayden Road and Via De Ventura in the McCormick Ranch area of Scottsdale. The units are individually metered for electricity and master-metered for water, sewer and trash—though the associated fees are passed-on to tenants, pro-rata.
Unlike many of the properties the company has sold of late, Via Ventura was not acquired pursuant to EQR’s 1999 merger with Scottsdale-based Evans Withycombe Residential. Instead, EQR purchased the property on July 18th, 1994 from Centennial Properties for $14,747,163 or $44,930.57 per unit. While the acquisition was cash-only, the property was later encumbered under an existing $136m deed of trust with Lasalle Bank. This debt was released and replaced with a cross-collateralized term note with Wells Fargo in the principle amount of $550m, which was itself partially released with the current sale.
Ignoring operations, the $36.5m sale price represents an 147.31% absolute rate of return and 7.82% on an annualized basis. Greystar paid $9.4m in cash and secured an additional $27.1m in agency debt with Prudential Multi-family Capital. The note was assigned to Fannie Mae at origination and though no maturity is listed in recorded documents, it is uncommon for commercial agency debt to bear maturity greater than ten years.
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