SCOTTSDALE, AZ - Security Properties and Intercontinental Real Estate Corporation purchased Pillar at Scottsdale, a 539-unit, Class A multifamily property located in Scottsdale, AZ, for $95,750,000. The asset was purchased through Security Properties Multifamily Fund II in its second joint venture with Intercontinental and their US REIF Fund. It is Fund II's second purchase in the Phoenix market and the 11th asset overall. This is the 89th asset in the Intercontinental Fund.
The subject is a high quality, core-plus Class A project that was built in 1999. Almost ½ of the units are townhome style plus ¾ of all units feature direct access garages. The location is outstanding as it is across the street from the TPC Scottsdale golf course and the Five Diamond Fairmont Princess Resort. To the west is the Reach 11 Recreational Preserve which is a 1,500 acre park with 18 miles of hiking trails as well as a large sports complex. To the south is the high-end shopping destination for Scottsdale with retailers that include an Apple Store, Nike Store, Lululemon and Forever 21. Trader Joe's is in the center caddy corner to the subject and Whole Foods is less than one mile north.
There are multiple employment drivers in the immediate vicinity including the Mayo Clinic two miles east. The clinic is opening a new $314M cancer center in 2016 that will create 1,000 new jobs. Adjacent to the Mayo Clinic is the American Express campus with 3,000 jobs. Additional blue-chip companies with large presences in the area include Prudential, Vanguard, JP Morgan Chase, Starwood, and Scottsdale Healthcare.
Because of the strength of this location, there is a value-add component of this acquisition as all units feature original interiors. The interiors will be updated and the exterior and amenity space will also be upgraded to be consistent with the new interiors. The end product will have a great market position because it will still be priced below new construction, but be able to offer direct access garages and townhome units that most of the competition does not have, plus offer a comprehensive amenity package that includes one of the top pool areas in the market.
David Dufenhorst, CEO of Security Properties says Fund II acquired this property because, "this was a rare opportunity to apply our proven value-add expertise to a unique asset with an A+ location. We are excited about the employment drivers in the area and firmly believe in the long-term viability of the townhome-style product. We think our renovation program will create value for our investors by producing a core asset well below replacement cost."
According to Jessica Levin, Director of Acquisitions for Intercontinental, "Phoenix is a dynamic market and Scottsdale is the most desirable location within the metro. With premier access to amenities, a location on Scottsdale Road, and high quality construction, this asset offers everything we look for in an investment. This unique combination makes Pillar at Scottsdale a fantastic long term investment for our investors."