Rancho Del Mar Apartments, 312-units located near Campbell Avenue and South of Drexel Road in Tucson, sold on March 23 for $19,100,000.
NorthMarq’s Phoenix Investment Sales team led by Trevor Koskovich, president; Jesse Hudson, vice president; and Bill Hahn, executive vice president, brokered the sale and represented both buyer and seller in this transaction.
“During times of economic uncertainty and real estate volatility, we are investment advisors for our clients and must ensure both buyer and seller are cooperative and in agreement to move the deal forward. In Rancho Del Mar’s case, both sides were willing and able to do what it took to close, despite the ongoing pandemic that is happening in our world,” said Hudson.
RDM Tucson, LLC, an entity formed by Element Property Company of Marina Del Ray, California was the buyer. Element’s Investment Strategy targets assets in markets with strong, blue collar/middle class job growth. Element seeks to acquire apartment properties well below replacement cost and generate returns via near term cash flow, physical repositioning and market growth.
“Rancho Del Mar was a unique value-add opportunity due to the property’s Low Income Housing Tax Credit (LIHTC) restrictions,” said Hudson. “The entire property has rent restrictions in place but with the extended use period expiring in 2022, the property will naturally start to convert to market rate and additional value-enhancing improvements will push rents even further.”
Financing for the acquisition included a $15,280,000 Freddie Mac loan which was arranged by NorthMarq Capital’s James DuMars and Griffin Martin, managing directors. “The client had numerous finance alternatives at the time of acquisition but selected NorthMarq/Freddie Mac due to their certainty of execution, excellent loan terms and integrated direct lending platform,” said Griffin.
The seller was Scottsdale-headquartered Atlantic Development & Investments. Atlantic Development is one of the nation’s most successful developers of affordable housing communities and has been a leader in the development of approximately 3,000 LIHTC units in Arizona.
The 312-unit Rancho Del Mar apartment community, built in 1989, comprises 50 percent one-bedroom units and 50 percent two-bedroom units. The property, located on the west side of Campbell Avenue and south of Bilby Road, is situated in the south Tucson submarket. The property is located within easy access to University of Arizona, with over 43,000 students enrolled. Downtown Tucson, minutes away from Rancho Del Mar, ranks in the top 20 of Forbes Most Innovative Cities. There are 30 projects under construction or proposed-including hotels, apartments, commercial space, parks, and roadway improvements. Other major nearby employers include Tucson International Airport, Davis-Monthan Air Force Base, Southern Arizona VA Health Care System, and Pima Community College Avation Technology.