S-J Sells 258-Unit Monterra for $22M

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PHOENIX-Nearly 1.5 years after acquiring the Monterra Apartments for $18.13 million, the Seattle-based S-J Management LLC has sold the 258-unit luxury complex for $22.07 million to an Irvine, CA investor. Plans call for the buyer, Aslan Monterra I & II, to keep the complex for the long term.

“They were exchange buyers who had the funds available,” says David Fogler, senior vice president with Grubb & Ellis/BRE LLC’s Phoenix office. “They’d acquired another property not too far from this one, in an adjoining submarket. We thought they knew the market and submarket very well.” Monterra’s buyer used in-house brokers to negotiate the 1333 N. 24th St. take-over with Fogler and Grubb & Ellis’ senior associate Steven Nicoluzakis.

The transaction represents S-J’s final disposition of any area assets for the time being, but not its appetite to buy. As previously reported by GlobeSt.com, S-J has just closed on the $33-million acquisition of the 272-unit San Ventura Apartments at 3600 W. Ray Rd. in Chandler. Additional closings are scheduled for the coming weeks.

Fogler tells GlobeSt.com that S-J Management acquired the Monterra as a short-term investment not too long after it was completed. “There wasn’t much to do with it other than get it leased up,” says Fogler, who notes that occupancy has reached 96%.

The complex had been on the market only a handful of weeks, but attracted a plethora of buyers of all types. “We had dozens of interested parties looking at this,” Fogler says. “We had some converters, some TIC buyers and exchange buyers–an exchange buyer ended up buying it.”

Fogler says the buyer assumed a $14.5-million loan balance. The fixed-rate financing, locked at 5.75%, has interest-only payments through December 2007 and subsequent payments based on 30-year amortization, according to the dealmaker.

Completed in 2001, the class A Monterra has studios and one-, two- and three-bedroom units of 475 sf to 1,101 sf. Monthly rents go from $659 to $1,049. “The buyer’s initial plan is to keep this as a rental,” Fogler says. “But beyond that, we really don’t know.”