Information on the Target

Sanctuary at South Mountain is a modern, 166-unit horizontal Build-to-Rent (BTR) community located in South Phoenix, Arizona. Developed in 2024, the property is designed to meet the demand for quality rental housing in a rapidly growing urban area.

Each unit within the community features thoughtfully designed floor plans, nine-foot ceilings, and smart home technology, complemented by privately fenced yards or patios. The community is equipped with premium amenities, including a luxurious clubhouse, a spacious fitness center, and a resort-style pool and spa.

Industry Overview in Arizona

The Build-to-Rent sector in Arizona has seen substantial growth in recent years, driven by an increasing demand for single-family rental properties. This trend is largely attributed to a shift in lifestyle preferences, where more individuals and families prefer the flexibility of renting over the commitments of homeownership.

Arizona’s favorable climate, combined with its expanding job market, particularly in technology and finance, only adds to the allure of its rental markets. Cities like Phoenix and Tempe have become magnets for both residents and businesses, facilitating consistent population growth and a robust economy.

Furthermore, with a surge in remote working and lifestyle changes spurred by the pandemic, many have flocked to suburban areas looking for community-oriented, rental housing options that offer amenities aligned with modern living needs. As such, the BTR model offers an attractive alternative to traditional multifamily apartments.

The competition among developers to deliver high-quality BTR options continues to intensify, ensuring that properties like Sanctuary at South Mountain are well-positioned within this booming market landscape.

The Rationale Behind the Deal

The sale of Sanctuary at South Mountain for $48 million signifies investors' growing interest in the Build-to-Rent segment. The pricing reflects a robust per-unit valuation of $289,157, indicating a healthy return on investment for the seller, CRP/Brown 40th and Southern Owner, L.L.C.

The strategic appeal of this location, with easy access to major employment hubs across Phoenix, coupled with the high-quality construction and amenities offered at Sanctuary at South Mountain, creates a strong value proposition for the buyer, Tower 16 Capital Partners.

Information about the Investor

Tower 16 Capital Partners, based in San Diego, is an established investment firm specializing in multifamily and commercial real estate. With a focus on acquiring and managing high-quality properties, the firm has a proven track record of identifying lucrative investment opportunities.

This acquisition aligns with Tower 16's strategy to expand its portfolio in resilient markets, demonstrating the firm’s confidence in the growth potential of the Phoenix rental market. Their commitment to renovating and enhancing properties ensures they remain competitive and attractive to tenants.

View of Dealert

The acquisition of Sanctuary at South Mountain represents a sound investment opportunity for Tower 16 Capital Partners. The BTR model has gained traction, and as a high-demand asset class, it is likely to yield sustainable rental income over time.

Additionally, the location of the community in a burgeoning area with proximity to major employment centers enhances its attractiveness for renters, which can lead to lower vacancy rates and more stable cash flows.

Given the rising demand for rental housing and the quality of the Sanctuary at South Mountain property, investors can expect favorable long-term returns, reinforcing the wise decision of Tower 16 to invest in this community.

Overall, this transaction exemplifies a constructive strategic move in the current market landscape, positioning Tower 16 favorably for future growth amidst continued shifts in residential preferences.

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