Security Properties acquires Pavilions on Central in Phoenix, AZ
On May 15, 2018, Security Properties and funds managed by Oaktree Capital Management, L.P. purchased Pavilions on Central, a 254-unit multifamily property located in Phoenix, AZ for $59,000,000. SP now owns nine assets totaling over 3,700 units in the Phoenix marketplace.
The property is located within the Midtown neighborhood of Phoenix. Similar to the valley’s other core urban markets like Downtown Phoenix, Downtown Tempe or Old Town Scottsdale, Midtown offers an urban environment with walkability, connectivity, a plethora of amenities and a true work-live-play setting. Camelback Road and Central Avenue, the heart of Phoenix’s midtown area, lies just a ½ mile north of the property and is a thriving hub for popular restaurants, boutique shops, office space, light rail and historic neighborhoods.
The property sits adjacent to a light rail stop at the intersection of Central Avenue and Campbell Avenue, providing direct access to major employment / entertainment centers including Downtown Phoenix, Downtown Tempe and Sky Harbor International Airport. The property is also positioned in a highly visible location fronting Central Avenue, the main north/south transportation corridor in the city core.
Pavilions on Central is a garden-style apartment community that was constructed in 2000. The residential units are a mix of one, two and three-bedroom floorplans with an average unit size of 1,109 SF. Unique from the other apartment communities in this area, over 70% of units are either loft or townhome style with direct access garages in a total of 216 units (~85%).
The business plan is a light value-add. Between 2013 and 2016, prior ownership upgraded 100% of the units to a high-end spec. However, all bathrooms were left untouched and remain in their original 2000 condition. Ownership plans to renovate 100% of the bathrooms to a high-end spec matching prior ownership’s kitchen renovation. This will include quartz countertops, mirror surround, plumbing and lighting fixtures. They will also be supplementing the bathroom renovations with USB port(s) in each of the kitchens. On the exterior, plans include a complete painting of the exterior, adding a packaging system, re-purposing a portion of the existing storage space to a state-of-the-art fitness center and converting the existing fitness center to a game room / lounge.
According to Davis Vaughn, Senior Director at Security Properties, “Pavilions on Central was appealing to us because of the combination of the rare townhome-style product type and the location on a light rail. As Midtown continues to develop, these long-term competitive advantages should create value for our investors.”
“Phoenix continues to have a very strong outlook for apartment fundamentals,” added Jared Lazarus, Managing Director at Oaktree. “Pavilions is a great opportunity for us to expand our income-producing, core-plus business.”
The property will be managed by Security Properties-affiliate Security Properties Residential.