P.B. Bell Snaps Up Phoenix M-F Assets for $170M

The P.B. Bell Cos. completed the biggest deal in the company’s history and one of the largest in the Phoenix area since the recession, snapping up seven apartment communities for $168.5 million.
The Crosswinds complex in Chandler, Ariz.

The Crosswinds complex in Chandler, Ariz.

By Gail Kalinoski, Contributing Editor

The P.B. Bell Cos. is taking advantage of an improving multi-family market in the Phoenix area, snapping up seven apartment communities for $168.5 million – the biggest deal in the company’s history and one of the largest in the region since the recession.

The company acquired 2,759 apartment units from Standard Fund of Arcadia, Calif. The properties include Alante at the Islands, Crosswinds and Laguna Village, all in Chandler, Ariz.; Tuscany Palms and Whispering Meadows, both in Mesa; Siena Springs in Central Phoenix; and Tela Verde in Glendale.

“This is a significant win for our company, and is indicative of the potential we presently see in the metro Phoenix marketplace,” P.B. Bell Cos. president R. Chapin Bell said in a news release. “With apartment vacancy rates hovering at around 5 percent, the rental housing market continues to have a long runway.”

Bell said the company plans to make cosmetic upgrades to the properties to increase the value-add potential. He did not disclose the amount expected to be spent on the improvements.

He noted that the acquisitions show the local multi-family sector is improving and that buyers, sellers and developers are all responding to the economic recovery. Philip Lake, the firm’s director of acquisitions, said P.B. Bell Cos. expects to purchase more multi-family properties this year.

“We’ve set an aggressive acquisition strategy for 2014 and beyond, and these seven properties are representative of the velocity of our growth projections,” Lake said in the release. “We will continue to search out projects that will help us meet our goals.”

Colliers International reported the second quarter for the greater Phoenix area saw vacancy tick up slightly to 6.9 percent from 6.5 percent in the first quarter of 2014, but that was mainly due to newly constructed units hitting the market.

“Despite the recent rise, vacancy has fallen 90 basis points during the past 12 months and average vacancy over the past year is at its lowest point since 2006,” according to Colliers’ second-quarter report for Phoenix.

Average asking rents have increased for three consecutive quarters, up 2.6 percent from second-quarter 2013 to $804 per month in this year’s second quarter. Colliers noted that this marks a new high for rents in the region; it expects them to continue climbing as the new apartments are delivered. There are nearly 7,000 units under construction, up from 5,600 earlier in the year.

P.B. Bell Cos. has developed nearly 5,000 apartment units in 27 communities. Founded by Philip Bell in 1976, the Scottsdale, Ariz.-based company also has a growing commercial property management portfolio that includes office, industrial and retail space in Phoenix and Tucson.

However, two big deals last year involved the multi-family market. In December, the company closed on the site of a planned 244-unit luxury community near downtown Phoenix that is expected to open in 2015. The firm also closed late last year on a Scottsdale site where it will build 187 luxury apartments. In March 2013, P. B. Bell Cos. and Gilbane Development Co. began construction of an upscale, 389-unit apartment complex in Chandler.

The company’s CFO, Jeff Thompson, credited the acquisition team for putting the new deal together. Cindy and Brad Cooke of Colliers International in Phoenix were brokers for the transaction. Stonecutter Capital Management of New York provided the equity. Mortgage broker Seth Grossman, head of Meridian Capital Group’s San Diego office, and his colleague Ryan Gandel, along with Prime Finance Partners, were also involved in the deal.

“From our equity partner, mortgage brokers and lender to our internal and external due diligence and real estate operations people, each professional on the team played a key role in carrying this deal across the finish line,” Thompson noted in the company’s release.