Commercial Real Estate Direct Staff Report

Sunstone Realty Advisors has acquired two Phoenix-area multifamily properties with 484 units for $53.2 million from TIAA-CREF.

The two properties are the 208-unit San Brisas in Chandler, Ariz., and the 276-unit Paragon at Kierland in Scottsdale, Ariz. Sunstone, a Vancouver, British Columbia, investment manager, bought the properties on behalf of Sunstone U.S. Opportunity Realty Trust and U.S. Opportunity Realty Trust Fund 2. Both funds are open-end investment vehicles that have raised a combined $71.7 million. They each target commercial properties in the Sun Belt states.

TIAA-CREF picked up the two complexes in mid-2006 as part of a portfolio it acquired from DLF-USA Residential. That DLF portfolio also included the 488-unit San Melia Apartments in Phoenix, which TIAA sold this month to Investment Property Associates for $47.8 million.

Sunstone paid $19 million for San Brisas at 900 N. Rural Road, and has financed it with a $11.6 million mortgage that has a 5.63 percent interest rate and matures in December 2019. It acquired the other property, at 6623 N. Scottsdale Road, for $34.2 million and has taken out $20.8 million of floating-rate debt against it, which also matures in 2019.

Sunstone's first U.S. fund owns all of Paragon at Kierland and just 20 percent of San Brisas, whose other 80 percent stake is held by Fund 2.

The first fund launched its investing late last year when it acquired the 254-unit Windsong apartment complex in Dallas for $13.1 million. In May, it picked up two other Dallas-area properties, paying CRES Management $15.2 million for the 288-unit Fountainwood in Euless, Texas, and Tonti Properties $18.35 million for the 180-unit Livingston apartments in Plano, Texas. Wachovia Multifamily Capital Inc. provided $12.8 million of Freddie Mac financing for the Plano property.

Comments? E-mail John Covaleski or call him at (215) 504-2860, Ext. 208.