The Jones Lang LaSalle Phoenix Capital Markets Team completed two multi-family investment sales that will move the local Cobalt and Indigo rental properties from a “stalled” and distressed position on to a new track for quick completion and delivery to the Phoenix rental pool.
“The recession stopped many local multifamily and condo construction projects in their tracks, and some of these distressed sites have been sitting, unfinished, for years,” said Jones Lang LaSalle Executive Vice President John Cunningham.
“As our market fundamentals improve, we’re seeing properties like Cobalt and Indigo come under new ownership, gaining the capital resources they need to transition from a community eyesore to a completed, active rental complex. It is a very positive trend.”
Seattle-based Goodman Real Estate purchased Cobalt for $5.6M and Indigo for $4.2M. Cunningham, along with Jones Lang LaSalle Vice President Charles Steele, represented the properties’ seller, Newport Beach, Calif.-based Sabal Financial Group, which specializes in the acquisition of distressed real estate loans and bank credit advisory services.
Located at 32nd St. and Union Hills in Phoenix, Cobalt is a gated Class A multi-family property that includes 24 completed units and land for a 66-unit expansion.
Indigo is a fractured Class A condominium asset totalling 30 units at 16160 S. 50th St., near I-10 and Chandler Blvd. in Ahwatukee. Seventeen of Indigo’s units were previously sold as condominiums, however the new owner is pursuing acquisition of these sold units as part of its de-fracturing strategy. Indigo also has infrastructure in place to build an additional 78 units.
In the coming months, Goodman plans to begin construction on the outstanding units at both Cobalt and Indigo.
“These projects are not only operating at 90 to 100 percent occupied, which means they are providing current cash flow, they are also development opportunities. That is a unique mix that attracted significant private capital interest,” said Cunningham, who leads the multi-family investment practice for JLL in Phoenix.
“It also points to a Phoenix Class A apartment market that investors view as stable, with the renter demand needed to fill new units and keep us on the road to recovery.”
According to JLL, average occupancy for Phoenix Class A multi-family space experienced a steady rise in 2012, reaching between 90 and 95 percent occupancy at year end and continuing that positive performance into 2013.
“Market fundamentals support the completion of both Cobalt and Indigo,” Steele said. “By completing these projects, the new owner will build value at both sites, further demonstrating the strength of Phoenix’s economic recovery.”
A 25-year industry veteran, Cunningham joined Jones Lang LaSalle in late 2011, in response to a surge in multifamily transactions and client demand not seen in greater Phoenix for years. He is charged with establishing and expanding the firm’s multifamily investment sales practice in Phoenix and throughout the region.
Steele joined the practice in April 2012. Together, the team has already closed almost $40M in local multi-family investment sales.