Wednesday, May 8, 2013

Equity Residential Continues Phoenix Divestiture, Sells Sycamore Creek to Henderson Global Investors

VIZZDA—May 8th, 2013 — Equity Residential (EQR) has sold their third major multi-family development for the quarter—Scottsdale’s 350-unit Sycamore Creek Apartments—to representatives of Henderson Global Investors for $37.7m or $107,174.28 per unit. This sale marks the sixteenth disposition by EQR since announcing plans to acquire the assets of Archstone Enterprises from Lehman Brothers Holdings Inc. in the fourth quarter of 2012. Henderson plans several capital improvements for the property, including upgrades of the pool and clubhouse area.

Henderson put $400k down on the property and secured multi-family housing revenue bond financing issued by the Maricopa County Industrial Development Authority (MCIDA), underwritten by Merrill Lynch with Wilmington Trust as trustee. While the interest paid by these bonds is not tax-exempt, the developer has agreed to allocate twenty percent of the dwelling units to low-income housing for one year following close in exchange for offsetting tax credits. Henderson reports that is finances roughly two thirds of its multi-family acquisition and development in a similar manner.

In addition to its financing arrangement with the MCIDA, Henderson received an undisclosed amount through a second position deed of trust executed under the terms of the 2002 ISDA Master Agreement and including a Multi-Currency Cross Border Schedule, to mitigate foreign exchange risk and a Credit Support Annex, to mitigate derivative counter-party risk. EQR previously acquired the property from successors-by-merger to the original developers in an all-cash transaction for $16.2m or $46,285 per unit. The twenty-two, individually-metered, 2-story buildings were built east of the southeast corner of Invergordon and Thomas Roads in 1996 in 16.58 acres, zoned R-5.

Paul Dionne
Director of Analytics

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