Thursday, June 26, 2014

HSL Ventures Buys Station on Central for $53m

By: Paul Dionne |

The Station on Central
On the heels of last week’s $65m sale of ParcLand Crossing in Chandler, Tucson-based apartment investor HSL Properties has acquired The Station on Central for $53m or nearly $130k per unit. The sellers were a joint venture out of Colorado comprised of Scott Fisher of Baron Properties and J. James Riggs of Mountain West Industrial Properties who had previously acquired the property in a 2011 bank sale for $36.5m. HSL Properties paid $13.76m in cash for the property and financed the remainder with $39.24m in purchase money debt with Compass Bank. 

The Station on Central is a 414-unit “Class A” apartment complex just north of the northwest corner of Central Avenue and Indian School Road in Phoenix. The property’s seventeen 3-story residential buildings total 372,089 ft2 and were completed in 1999 on an 8.26 acre site. The property is individually metered for electricity and utilizes a Rationed Utility Billing System—or RUBS—for water, sewer and trash. RUBS is a system where utility costs are apportioned according to the square footage of the unit. The complex has 240 one bedroom units with three floor plans, 162 two bedroom units and twelve three bedroom units.

The Station on Central Facade, Facing South
The property was previously acquired by Empire Equity Group (75%) and Bush Realty (25%) as tenants-in-common on June 30th, 2004 for $31.5m or $76,086 per unit with $24.235m new purchase money debt with KeyBank. An additional $39.5m in debt with Deutsche Bank was issued against the property on December 9th, 2005. Following assignment of the note to Wells Fargo and securitization, the property was noticed for trustee sale on April 12th, 2010 with CW Capital as Special Servicer for the CMBS note. The property reverted to Wells Fargo July 16th, 2010 through trustee's deed with a $30m credit bid.

As mentioned above, Baron and Mountain West acquired the property, then known as Empirian on Central on May 3rd, 2011 for $36.5m or $88,164 per unit with $20.0M in new debt with Great West Life & Annuity Insurance. Tuesday’s purchase price of $53m represents a 45.2% absolute rate of return or 15.0% annually, a 221.2% levered rate of return or 73.7% annually and a 81.8% cash-on-cash return or 27.2% annually, ignoring hold costs and operational proceeds.

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