Caliber to Begin Construction on New Housing Development in Ahwatukee, Arizona
Caliber (NASDAQ: CWD) has announced the commencement of the first phase of its SP10 project in Ahwatukee, South Phoenix. The project involves converting a 160-room hotel into 104 apartment units and constructing 88 townhouse-style units. This development aims to meet the high demand for rental housing in the area, which has been exacerbated by high homeownership costs and interest rates. The location is strategically situated near major highways, the Intel semiconductor plant expansion, and other key business districts. The first phase is fully funded, combining investor equity and a construction loan. The project is expected to provide attractive returns for investors and is part of a single-asset syndication that is still open to new investors.
- Caliber has fully funded the first phase of its SP10 project.
- The project aims to address the high demand for rental housing in Phoenix.
- Conversion and construction will provide 192 new housing units.
- Strategic location near major highways and business districts.
- The project is expected to offer long-term attractive returns for investors.
- The project originally acquired in 2018 was negatively impacted by the pandemic.
Insights
The announced development project by Caliber (NASDAQ: CWD) holds significant implications for the company and its investors. Firstly, the conversion of a 160-room hotel into 104 apartment units with Class A amenities represents a strategic reuse of an underperforming asset. This move not only maximizes the utility of existing real estate but also caters to the high demand for rental housing in the Phoenix area. Given the current high interest rates and the gap between mortgage payments and monthly rents, this focus on rental properties is well-aligned with market trends.
From a financial perspective, the completion of funding for the first phase through a mix of investor equity and a construction loan demonstrates sound financial planning. This ensures that the project is not overly reliant on debt, which could be risky in a fluctuating economic environment. The project's location near key business hubs and amenities, such as the new Intel semiconductor plant expansion, enhances its attractiveness to potential renters, potentially ensuring high occupancy rates and stable rental income.
However, investors should also consider the costs and risks associated with the redevelopment and construction. Market volatility and potential delays could impact returns. Additionally, the reliance on future phases for full project completion means sustained investor interest is crucial. Overall, the successful execution of this project could significantly enhance Caliber’s portfolio value and revenue streams.
The demand for housing in the metro Phoenix area is notably high, driven by the widening gap between mortgage payments and monthly rents. Caliber's new development directly addresses this gap, providing both apartment and townhouse-style units to a market with a pressing need for rental options. The strategic location near major highways and business districts, including the new Intel semiconductor plant, positions the development as attractive to a broad demographic range, from young professionals to corporate housing seekers.
Demographic trends support this initiative. Phoenix's reputation as a desirable place to live, combined with its growing business environment, suggests strong demand for such housing solutions. The inclusion of Class A amenities and a focus on co-working spaces caters to the increasing number of work-from-home professionals, enhancing the project's appeal.
Nonetheless, competition in the real estate development sector is fierce. While Caliber’s approach of converting underperforming assets into valuable properties is innovative, it is important to remain adaptive to market shifts. The project's success will depend on continuous market research and adjustments to meet tenant expectations and preferences.
The transformation of a distressed hotel asset into a residential complex is an excellent example of adaptive reuse in real estate development. This approach not only revitalizes underutilized properties but also meets community needs, particularly in areas with high housing demand like South Phoenix. The project's phased approach and careful funding strategy mitigate some risks commonly associated with large-scale developments.
From a development perspective, the project's success will hinge on several factors. The demolition and construction processes must progress smoothly to avoid cost overruns and delays. Moreover, the integration of amenities tailored to the target demographic, such as work-from-home spaces and recreational facilities, is essential for attracting and retaining tenants.
However, potential challenges include navigating the regulatory landscape and potential community opposition. Ensuring compliance with local zoning laws and maintaining good relations with the community are paramount. If managed well, this project could serve as a model for similar adaptive reuse projects in other high-demand urban areas.
Hotel conversion and property expansion to bring 104 new apartments and 88 townhouse-style units to prime
Caliber begins hotel conversion and property expansion to bring 104 new apartments and 88 townhouse-style units to prime
Demand for housing rental options across the metro
Located at the southwest corner of East Elliot and 51st Street, Caliber’s new housing complex is ideally situated adjacent to the I-10 Highway, providing convenient access to the new
Chris Loeffler, CEO of Caliber, said, “Funding this project initiates the turnaround of a hotel asset we acquired in 2018 that was negatively impacted by the pandemic. Through the combination of investor equity and a new construction loan, we have fully capitalized the first phase of this built-for-purpose housing complex that will meet the growing housing needs of this vibrant community.”
“Our team continues to see a growing number of distressed or abandoned assets across the marketplace. In this case, we developed and are executing our own solution to an underperforming asset that we expect to provide a long-term, attractive return for our investors and partners,” Loeffler concluded.
The SP10 project is part of a Caliber-sponsored single asset syndication, which is continuing to accept new investors.
With panoramic views of South Mountain Park, the 104 apartments will include 23 studio, 80 one-bedroom and one two-bedroom units. Each apartment will have a full kitchen and washer/dryer units. The ground floor will feature Class A amenities with a focus on co-working space and club amenities designed for work-from-home residents. The 88 low-density townhome-style units surrounding the tower will average just over 1,200 square feet in size and some will include direct access to a garage.
Caliber expects to begin construction on the tower phase of this complex in the fall.
Editors Note: Additional renderings are available upon request.
About Caliber (CaliberCos Inc.) (NASDAQ: CWD)
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Caliber:
Victoria Rotondo
+1 480-295-7600
Victoria.Rotondo@caliberco.com
Media Relations:
Kelly McAndrew
Financial Profiles
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Source: Caliber
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