- In 2Q 2018 Loewen Langdon invested, in partnership with The Michael Evans Family Office (“MEFO”), in a 188 unit, Class “B” condo deconversion-to-apartment located in Chandler, AZ.
- MEFO has a successful track record in Phoenix executing two other condo-toapartment deconversions.
- Arizona State Statue allows the owner of 80% or more of the units in a condominium
to vote to terminate the HOA and revert the complex to a 100% apartment by forcing the
remaining unit owners to sell their units at a third party appraised price. Currently all
remaining units are non-warrantable/nonconforming, thus highly illiquid.
- Chandler is a suburban technology hub and rapidly growing economic driver for the Greater Phoenix Metropolitan Area
- Submarket vacancy is just under 4% with continuing rent growth.
- The complex has numerous amenities (pool, spa, BBQ, clubhouse, etc.) and units feature 9’ ceilings and full-sized washers & dryers.
- The project’s business plan is to purchase the remaining condo units to achieve 80% ownership and terminate the HOA. Once termination occurs the remaining units will be purchased. The property will then be stabilized & immediately taken to market with no capital improvements planned for the unit interiors. The targeted hold period is 12 months
- Upon the initial closing of the 134 units, rents were immediately increased 10% with zero capital improvements and occupancy has been increased from 87% to 99%. The property was previously mismanaged.
- The all-in basis per unit is expected to be $136,000 while multiple recent comparable sales have been $175,000 per unit.
- 71% of the units were purchased by MEFO in January 2018. By the time of Loewen Langdon’s equity investment in mid-June another 8 units had been purchased bringing the total ownership to 76%. The remaining 9 required units are in-process of being purchased