VIZZDA—June 15th, 2013 — Equity Residential (EQR) is continuing it’s massive divestiture from the Phoenix market by selling three parcels of final platted land totaling 38.764 acres and planned for 834 units, for $25.75m to Camden USA. As their recently filed final plats suggest, these parcels came to EQR by way of their recent acquisition of the Archstone Enterprises portfolio from the bankruptcy estate of Lehman Brothers.
Camden paid cash for the three properties, described as follows:
- Archstone at DC Ranch – 9.254 acres of raw infill land, zoned PNC PCD. Planned for a 220-unit apartment complex in 16 buildings totaling 350,000 ft2 for a proposed project density of 7.6 DU/AC. Sale Price: $11m; $27.3/ft2
- Archstone Tempe – 7.8 acres of existing commercial development, zoned R-5 PAD. Planned for a 234-unit apartment complex in eight buildings comprised of 96 one bedroom, 113 two bedroom and 25 three bedroom units. Sale Price: $9.243m; $27.20/ft2
- Archstone at Village Crossing – 21.71 acres of agricultural land, zoned C-3. Planned for 380-unit apartment complex in fifty-one 2 & 3-story buildings for a proposed project density of 17.5 DU/AC. Sale Price: $5.507m; $5.823/ft2
Archstone acquired the parcels in three transactions beginning with the November 9th, 2011 purchase of 9.254 acres infill land in the DC Ranch community for $8m, followed by $8.5m for 7.8 acres at the northwest corner of Scottsdale and Curry Roads–discussed here—and finally acquiring a 21.71 acres of agricultural land in Chandler for $3.25m on December 24th, 2012. EQR announced its plans to acquire the Archstone portfolio in the Fourth Quarter of 2012 and completed the acquisition in the First Quarter of 2013. Prior to their acquisition by Archstone, each of the three parcels was either bank-owned or had recently moved off of a bank balance sheet to a short-term investor at a significant discount to debt outstanding.
The DC Ranch parcel was acquired from developers on December 27th, 2006 for $5,830,608 or $14.45 per square foot with $192,960 down and $7m new seller-carryback financing. The property was refinanced through Home National Bank and the principal balance outstanding was increased to $15,612,993. Home National Bank took the property back deed-in-lieu of foreclosure on December 8th, 2009 and sold concurrently to Avenir Group for $13.24m or $32.84 per square foot with assumption of the outstanding debt with Home National Bank, stipulated to be $13.12m at the time of sale.
On July 9th, 2010, Home National Bank was closed by the FDIC, which named Enterprise Bank and Trust as Acquiring Financial Institution. Enterprise also had occasion to take the property back deed-in-lieu before selling to a Wichita, Kansas-based investor group, HCW Development, for $5,488,104 on August 15th, 2011. HCW realized a roughly 189% annualized rate of return on their sale of the property to Archstone Enterprises following a three-month holding period.
The Tempe parcel was acquired as roughly 13.5 acres in January of 1999 for $9.775m and operated as a fitness center. The prior owner paid $2,765,879 in cash and assumed $7.1m in existing debt with Northland Financial. Lehman Brothers lent an additional $7.2m on the property and securitized the note with Wells Fargo as Trustee and LNR Partners as Special Servicer. That note was served a notice of trustee sale on July 26th, 2010 and sold to Bruce Shapiro and Martin Landis on July 14th, 2011. Landis and Shapiro foreclosed on the property on July 26th, 2011 with a $6.25m credit bid.
The Chandler parcel was acquired as 39.96 gross acres by local investors Wayne Howard and Michael Lieb for $2.9m or $1.67 per square foot. Stearns Bank was the seller and lent $1.45m against the property, maturing March 4th, 2014. That parcel was then split into the 21.71 acre multi-family parcel and 13.84 net acres for future commercial development. The investor group retained the commercial portion. Not only does this sale completely clear the cost basis for the larger assemblage, but on a per square foot basis, Howard and Lieb were able to realize a 110% annualized appreciation for their property.
Director of Analytics