Neighborhood Ventures has acquired 16 apartment properties in its eight-year history.
“We've typically been value-add operators for the last seven years, buying ‘70s and ‘80s vintage buildings in Phoenix, renovating them, taking rents to market rent, having nice returns and then reselling them,” Jamison Manwaring, co-founder and CEO of the firm, told Multifamily Dive. “That model right now is dead. We haven't done a deal in a year and a half after doing three or four deals a year for the six years prior.”
But purchases of Venture on Colter, a 123-unit multifamily property in central Phoenix near Grand Canyon University and I-17, and Venture on 52nd Street show Neighborhood Ventures is shifting its focus to distressed properties.
On Tuesday, Neighborhood Ventures bought Venture on 52nd Street, a 71-unit multifamily property in the Arcadia neighborhood of Phoenix, which is the first time the firm has purchased a foreclosure, according to a news release.
The crowdfunding firm bought Venture on 52nd Street for $11 million, which it says is a 35% discount from its 2022 valuation of $18.3 million. The property features 12 studio units, 47 one-bedroom units, and 12 two-bedroom units.
Two weeks ago, Neighborhood Ventures bought Venture on Colter directly from a lender for $13 million. Manwaring said that the move enabled his company to seize a time-sensitive acquisition at a significant discount — approximately 30% below its 2022 value. The firm says it has raised $4.5 million from 95 investors for the offering.
“Grand Canyon University, in the last 20 years, has really changed this whole part of Phoenix,” Manwaring told Multifamily Dive. “They're directly across the street from us. They bought a property south of our building for a parking garage in the last five years, and they're doing other development there.”
Student housing opportunity
Venture on Colter, formerly known as Thom Slate on Colter, was built initially for weekly rentals in the 1970s. However, the expansion of Grand Canyon University and job growth in the area led to changes.
The property has already been extensively renovated with updated cabinetry, fixtures, painting and new appliances. It also has two pools, spacious ramadas and updated infrastructure.
Neighborhood Ventures anticipates that, with strategic property management and focused leasing efforts, full occupancy will be achieved within the next six months. Right now, less than 10% of the residents are students.
“There hasn't been a lot of continuity and a marketing plan behind [the property],” Manwaring said. “So we think there’s going to be an opportunity for us to get some of these seniors and juniors who want to walk to school without a car and have their own space.”
Though the property is in the path of the university’s expansion, Manwaring doesn’t expect the university to buy the asset from him in the near future.
“I think over the next 10 to 15 years, they likely buy this thing,” Manwaring said. “We're more of a three-year hold, so it depends on where their funding is at. They go through ebbs and flows. They do a lot of development and a lot of acquisitions, and then they slow it down.”
Manwaring doesn’t expect Venture on Colter to be his last distressed purchase of an older property in Phoenix. “We plan to acquire as many of these as we can this year,” he said.
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