Rise48 Equity on Track to buy $250M in Valley Apartments
By Angela Gonzales – Senior Reporter, Phoenix Business Journal
Jan 28, 2021, 8:00am EST
Zach Haptonstall, co-founder and principal of Rise48 Equity LLC, plans to spend $250 million this year on apartment units in metro Phoenix.
Haptonstall said he's bullish on apartment acquisitions in metro Phoenix because of its strong job, population and rent growth.
Rise48 Equity just paid $24.25 million for the 160-unit Pointe Vista Apartments at 2045 W. Butler Drive in Phoenix.
This acquisition brings Rise48 Equity's portfolio to 660 units across six properties in Glendale, Phoenix, Scottsdale and Mesa.
Haptonstall, who started Rise48 Equity in 2019, has another $35 million deal under contract and is in negotiations on another $45 million property.
"We are on track to close on $80 million to $90 million in the first quarter and another $80 million to $90 million by the second quarter," he said. "We are syndicating these deals with our own investors so far and are looking to partner with larger equity groups."
Plans call for investing about $1.4 million to renovate the property, which was built in 1981 and is 98% occupied.
Monthly rents — which currently range from $840 to $1,200 — will increase by $100 to $190 once renovations are completed.
"We're not trying to price people out of the market," Haptonstall said. "Units in the immediate area are already achieving these rents we're going to push them to."
Across the Valley, rents averaged $1,239 per month at the end of 2020, representing a 5% increase from the previous year, said Peter O'Neil, research director for NorthMarq.
Rents have continued to rise as demand has grown over the past several years.
"As recently as 2017, average apartment rates were under $1,000, but demand for rental housing has been very strong in recent years, which has caused vacancy rates to fall, and allowed apartment owners to increase rents," O'Neil said. "The value-add strategy of acquiring older properties, upgrading the units and raising rents has proven successful, which has also caused average rents to rise."
Metro Phoenix has a shortage of workforce housing, O'Neil said.
"One trend that we saw in 2020 is that the strongest rent increases occurred in many of the lower-cost submarkets, so areas of the Valley that may have been fairly affordable a few years ago are more expensive today," he said.