Camden Returns to Strong Phoenix Market With $97 Million Purchase

Article originally posted on CoStar on March 11, 2019

Camden Old Town Scottsdale has amenities equal to many of the newer rental properties in greater Phoenix. Photo: CoStar

One of the country’s biggest multifamily investors has returned to the Phoenix area to buy apartments for the first time in seven years, a sign of strength for the robust market.

Camden Property Trust, a real estate investment trust out of Houston, plunked down $97 million for the 316-unit, low-rise property at 7350 E. Stetson Drive in Scottsdale, Arizona. The community was built in 2015 and was known until this month as The Stetson. Camden has renamed it Camden Old Town Scottsdale.

The complex, which fetched $307,000 per unit, has all the up-to-date amenities expected in newer rentals: wood floors, stainless steel appliances and balconies. The shared perks include a swimming pool, outdoor area with grilling stations, fitness center, lounge with a chef’s kitchen for parties, and vintage arcade games.

Those attributes align with the portfolio of Camden, a REIT that mainly concentrates on developing and operating newer, core-quality rentals in the Sun Belt and Southwest. The REIT has developed properties in the Phoenix area in recent years but hasn’t bought an apartment there since 2012.

Many of the apartment REITs have slowed down their acquisitions as this economic cycle appears to be approaching its inevitable end. But Phoenix seems to have staying power with big investors. It was one of the first rental markets to show signs of life when the recovery began in earnest in 2010, and while other early-recovering markets have slowed or passed their peak, Phoenix has kept on chugging.

Apartment sales in Phoenix topped $6.5 billion in the past 12 months, according to CoStar data. That’s a 24 percent jump over the previous year and 10 times the rate of growth apartment sales saw nationwide, at 2.4 percent. Rent growth, too, has been among the best in the nation. Rents in the Phoenix area grew an average of 7.2 percent in the past year, almost triple the national rate of 2.9 percent.

“Phoenix also has the rare distinction of a metro that can sustain robust rent gains while absorbing an inundation of new supply,” according to CoStar’s latest market report on the area.

In an earnings call this week, Camden executives gave Phoenix, along with Denver, an “A” rating on the REIT’s investment scale.

Camden already owns about 3,000 apartments in the Phoenix area and has the 441-unit Camden North End under construction. The firm owns 161 properties with 55,000 apartments nationwide.

For the record:

CBRE’s investment sales team led by Asher Gunter represented the seller on the Camden Old Town deal, Salt Lake City-based Cottonwood Residential.

For more information on the transaction, please see CoStar Comp #4688491.

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