Big Deals

All according to (master) plan

Why IHP Capital Partners and Värde Partners acquired balance of land in Vistancia

By KYLE BACKER

North Peoria’s Vistancia community is about to welcome new neighbors. Californiabased IHP Capital Partners and Värde Partners, with U.S. offices in Minnesota and New York, recently formed a joint venture to purchase 3,721 acres of land within Vistancia. According to the commercial real estate tracking website Vizzda, two transactions totaling $68 million include all 3,300 entitled residential dwelling units in the Northpointe neighborhood and 370 acres of commercial mixed-use development that will serve a town center. The strategic partnership, called Vistancia Development LLC, intends to deliver 520 singlefamily residential lots to homebuilders later this year.

“IHP Capital Partners is very bullish on our project in Vistancia but also very bullish on Greater Phoenix in general. That’s why we took this large position in Peoria,” says Richard Whiteley, co-president and COO of IHP. “We’re going to be aggressive and active here for some time to come.”

Katie Gregory

THE DEAL

Vistancia’s brand recognition as one of the top-selling master-planned communities in Greater Phoenix made it enticing for investors, especially since the development still has room to grow in both residential and mixed-use areas. For Whiteley, investing in a mature master-planned operation meant that some financial risks were diminished.

“People have already voted on Vistancia — 17,000 residents live there. The thing about buying into these midcycle master plans is we already have some comfort that the investment thesis has been proven. The deal is somewhat de-risked by the fact that the southern half of the master plan has been so successfully received,” Whiteley says, adding that nothing is a sure bet, especially in real estate.

The collaboration between IHP and Värde Partners also lowered the exposure of both firms. “We want to de-risk investments for us. Our

Mark Hammons Richard Whiteley

partnership with Väde Partners allows two preeminent firms in residential real estate to come together and split a project,” Whiteley remarks.

The northwest Valley where Vistancia is located is easily accessible thanks to the Loop 303, which connects the region with the rest of Greater Phoenix. Just 15 minutes east of Vistancia, Taiwan Semiconductor Manufacturing Company (TSMC) has started construction on a $12 billion chip plant that will attract workers and further investment. This will add to the workforce already present in the northwest Valley, making the area a robust employment corridor.

“What we like about Peoria is that it’s an area that’s going to grow through the knock-on effects of what’s going on with manufacturing to the southwest in Glendale and with TSMC to the east. All the network effects that come with investments of that size means that the northwest area of Loop 303 is going to fill in,” Whiteley comments.

The Loop 303 is a boon to Vistancia and the Northwest Valley, according to Katie Gregory, deputy city manager of Peoria. “Having the Loop 303 come through opened up the opportunity for Vistancia’s commercial core to be more than what I call neighborhood commercial. It has greater regional potential because of the infrastructure and ease of access,” she says. “Other communities such as Lake Pleasant Heights are coming in with about 4,000 units. And then north of Vistancia will be Saddleback Heights, which has another 8,000 units planned with some commercial nodes all the way up to Carefree Highway.”

Another factor making the decision to invest in Vistancia easier was the support from the City of Peoria.

“Our CEO, Doug Neff, met with Peoria’s city council. Part of our due diligence was trying to understand the thinking toward the project, because you don’t want to make an investment of this size and not comprehend the political climate,” Whiteley explains. “We got very comfortable very quickly. The council members are smart and engaged. We’re working with them closely to ensure that we all like what happens in the town center and, of course, in Northpointe.”

NORTHPOINTE

Mark Hammons, principal at Land Resources (LRI), has history with Vistancia. When the community was first breaking ground, he was the senior vice president at Sunbelt Holdings, which formed a joint venture with J.F. Shea for the project. Hammons was named general manager for the partnership and continues that work today under the LRI flag.

Land Resources helped IHP and Värde Partners get comfortable with the asset and the acquisition by providing data collected from managing the day-to-day operations. “We know what things cost and what they sell for, and we manage the marketing of the entire master plan,” Hammons explains.

Located at the northern end of Vistancia between the White Peak and Twin Buttes landforms, Northpointe sits at a slightly higher elevation than the other neighborhoods within the development. This topography offers residents commanding views of the desert scenery. According to Whiteley, Downtown Phoenix is visible from certain lots on a clear day.

“Now, this is not going to be a customhome community. Our pro forma has houses that range from 1,700 square feet to 2,900 square feet and are priced between $350,000 to $520,000. We'll be offering homes with views in the $450,000 to $500,000 range, which I think means that we’re going to be in great shape to sell through quickly,” Whiteley continues.

The nearby town center will be situated on the 370 acres of commercial mixed-use development. Plans for the area include restaurants, retail, apartments, and industrial and office space. “There’s going to be the city center type of development that needs to be there to support nearby residents. But then there’s also going to be plenty of space for us to have advanced manufacturing, supply chain for TSMC, corporate headquarters — whatever we can draw to the area that makes sense,” explains Gregory. “This isn’t going to be built out in the next five years. It’ll probably be more along the lines of the next 20 to 30 years.”

Hammons concludes, “A project like Vistancia needs a team like IHP and Värde Partners to keep the vision of the master plan. They believe in the market. As a development management company, LRI feels that Vistancia is in very good hands, especially for its last stages of the master plan. It's a community that’s going to continue to evolve over time and is set up to succeed very well right now.”

MULTIFAMILY/SALES

$159M | TRADITION AT KIERLAND 6633 E. Greenway Parkway, Scottsdale BUYER: First Pointe Management Group/Ezralow Group SELLER: Bascom Group LENDER: LoanCore Capital

$153.5M | LEGEND AT KIERLAND APARTMENTS 6735 E. Greenway Parkway, Phoenix BUYER: First Pointe Management Group/Ezralow Group SELLER: Bascom Group LENDER: LoanCore Capital

$150.5M | THE DISTRICT AT SCOTTSDALE 15446 N. Greenway Hayden Loop, Scottsdale BUYER: Kohlberg Kravis Roberts & Co. SELLER: F & B Capital and Bluerock Real Estate

INDUSTRIAL/SALES

$103.2M | 901,700 SF LINCOLN LOGISTICS CENTER 40 575 S. 143rd Ave., Goodyear BUYER: American Realty Advisors SELLER: Nike Inc.

$56M | 450,619 SF 2250 S. LITCHFIELD RD. Northwest corner of Litchfield Road and MC 85, Goodyear BUYER: CIM Group SELLER: Opus Development BROKER: Cushman & Wakefield

$25.4M | 153,517 SF 725 N. 73RD AVE. Northeast corner of 75th Avenue and Van Buren Street, Phoenix BUYER: Kohlberg Kravis Roberts & Co. SELLER: Baron Properties / Mountain West Industrial Properties $130M | THE SCOTTSDALE GRAND 15501 N. Dial Boulevard, Scottsdale BUYER: Oxford Properties Group SELLER: Kaplan Companies

$125M | PARCLAND CROSSING 800 W. Willis Road, Chandler BUYER: Sunroad Enterprises SELLER: Private Portfolio Group

$22M | 44,244 SF 2601 W. BROADWAY RD. Southeast corner of 48th Street and Broadway Road BUYER: Mapletree Investments SELLER: Sila Realty Trust

$19.1M | 104,273 SF CHANDLER BUSINESS CENTER 6150 W. Chandler Boulevard, Chandler BUYER: Scanland Temper Bard and Patrick Terrel SELLER: Fullerton Properties

OFFICE/SALES

$56.5M | 181,440 SF CASA

7878 N. 16th St., Phoenix BUYER: GLL Real Estate Partners SELLER: George Oliver

$125M | 5,458 AC FORMER CHRYSLER PROVING GROUNDS Northeast corner of 211th Avenue and Dove Valley Road, Wittmann BUYER: An entity managed by Greenberg Traurig SELLER: iStar

$39M | 226,449 SF GAINEY RANCH CORPORATE CENTER — 8877 BUILDING 8877 N. Gainey Center Drive, Scottsdale BUYER: Dansons SELLER: Nationwide Realty Investors SELLER BROKERS: Lee & Associates BUYER BROKERS: Cushman & Wakefield

$30.2M | 206,199 SF PERIMETER PARKVIEW CORPORATE CENTER 8377 E. Hartford Drive, Scottsdale BUYER: Stephen and Lawrence Cushman SELLER: Kristen Parrish and Britney Camacho $24.6M | 199,677 SF AIRPORT TECHNOLOGY CENTER 4127 and 4129 E. Van Buren St., Phoenix BUYER: TerraCap SELLER: Lone Star Funds

$14.9M | 11,129 SF DIGNITY HEALTH — ST. JOSEPH’S HOSPITAL AND MEDICAL CENTER 4975 N. Dysart Road, Litchfield Park BUYER: Wolfsen Land & Cattle SELLER: Synergis Development Partners

LAND/SALES

$123.2M | 388.95 AC EASTMARK LAND

Northeast corner of Ellsworth and Warner roads, Mesa BUYER: Redale LLC SELLER: DMB Associates Inc.

$40.1M | 168.51 AC AIRPARK LOGISTICS CENTER (PROPOSED) Southeast corner of Estrella Parkway and Yuma Road, Goodyear BUYER: LGE Design Build SELLER: SunChase Holdings BROKER: Land Advisors $32.9M | 82.19 AC SWC 107TH AVENUE AND I-10 Avondale BUYER: Ashley Furniture Industries SELLER: Ergas Group

$23.6M | 148 AC SEC 99TH AVENUE AND BUCKEYE ROAD Estrella Village BUYER: George Oliver SELLER: John E. Garretson