An investment fund created by HGTV star Tarek El Moussa and Scottsdale-based Hanson Capital Group closed on an acquisition of a 45-unit apartment complex in central Phoenix, which is part of a focused effort to buy value-add real estate in the Phoenix area.
The building, located on 38th Street and Thomas Road, is now called Element on 38th, was purchased for $5.8 million from Tides Equities, according to real estate database Vizzda.
Chris Hanson, the founder of Hanson Capital Group, said one of the property’s features has been part of strategy in the investment process. The building has a master meter, meaning the entire building is on one power meter and the utility costs are included in the rent. The two plan to add solar panels and power to the building, which will lower utility costs and increase the profitability. This will be the second building with that type of metering where the two have added solar.
“We are not aware of anyone else doing the solar play,” Hanson said.
El Moussa, star of HGTV’s “Flip or Flop” and “Flipping 101” and Hanson formed TEM Investments Management-Powered by Hanson Capital to oversee the first $100 million fund, which is focused on multifamily assets. The fund launched in April and continues to seek investors. Hanson said many of the investors in the latest round have come from California.
Construction has already begun on some upgrades to the building, which only had one vacancy when they bought it. Upgrades include new windows and doors and other improvements focused on tenant retention, Hanson said.
Hanson said the escrow period on the acquisition was long, and the market changed a lot during the time the property was under contract, getting the firm a better value for the property.
Separately, Hanson Capital has another, $100 million investment fund that it is raising capital for to buy industrial real estate. The firm recently closed on its first investing round, and has already bought four Phoenix industrial properties and two properties in Dallas.
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