Dominium/Blackstone Build 500 Affordable Senior/Family Units in AZ

Dominium, using $79 million of Low Income Housing Tax Credit equity raised through Blackstone, is developing more than 500 affordable family and senior housing units in Phoenix in two separate but neighboring projects.

Aviara Flats is a 372-unit family development, while Casa Azure provides 189 apartments for seniors. Blackstone’s affordable housing unit April Housing is Dominium’s development partner on the deals.

Jacob Berger, development analyst at Dominium, says Aviara Flats and Casa Azure were built on neighboring parcels near the Desert Sky Mall in Phoenix.

“They were constructed at the same time by the same general contractor with similar financing partners as well, but they are two separate properties constructed at the same time,” he elaborates.

April Housing, a unit of Blackstone, “is the limited partner/investor on both projects,” Berger says. Dominium has done a couple of family/senior projects adjacent to each other and has another one under construction in Glendale, a suburb of Phoenix.

Berger says Aviara and Casa Azure are on “a great site, and we think they will have a good impact on that area and the people who live there.”

The location is good for shopping and working, he says, near a Walmart, a Walgreens and a big interstate, I-10. It is about a 15-minute drive from downtown Phoenix.

“It’s huge in Arizona to be next to a freeway,” Berger comments.

Supporting the Local Community
“We’re supporting the community in a place not all developers do,” he adds.

Aviara Flats was April Housing’s first LIHTC project. Parent Blackstone provided $48 million in tax credit equity for the project, as well as another $21 million for Casa Azure, for a total of $79 million in financing for 568 units of housing in Maricopa County.

Both projects have the same income limits (60 percent of area median income) and the same gross rents.

“There’s a huge need for both, especially in Arizona,” Berger says, especially considering the high cost of housing in the Phoenix area. Berger notes there has been a huge rent spike in Arizona recently.

The two projects “certainly help” with the housing need, as overall there is not enough supply of affordable housing, he says.

“It definitely helps the area, though it doesn’t solve the problem,” Berger says.

“We saw that need at the beginning and also at lease-up,” he adds. Both projects are 100 percent occupied and had quick lease-up periods of four to six months.

Unit splits at Aviara Flats are 12 one-bedroom units, 168 two-bedrooms and 193 three-bedrooms. At Casa Azure, there are 54 one-bedrooms, 122 two bedrooms and 23 three-bedrooms.

Dominium had no difficulty in raising the funds for the projects despite a current high-cost environment, Berger says.

A Large TDC
Berger says there’s a lot of interest in financing projects in Arizona and Dominium “has had a lot of success in this state. It was a pretty easy pitch to investors.”

He admits, though, that these are high-cost deals that can cause some investor hesitation. Aviara Flats had a $137 million total development cost (TDC), while Casa Azure came in at an $80 million TDC.

Will Dominium look to do more of these senior-family combos?

“We’ll see going forward,” says Berger, noting that financing them is “a large bite” for investors. “But we won’t stop looking at senior-family deals.”

The financing included tax-exempt construction loans from Deutsche Bank and equity bridge bonds originated by Colliers Securities. The permanent mortgage was a Freddie Mac forward and JLL was the servicer. There was also some soft financing “that was super helpful,” Berger says.

Aviara is a three-story walk-up building, while Casa Azure is a four-story elevator building. They were designed to have neutral colors to fit with a desert motif, something “that fits well within the landscape,” he says.

All the units have high-quality, energy-efficient lighting. “There’s a dog wash at Aviara, it’s kind of cool to see that,” Berger says. Aviara Flats will feature several high-end community amenities, including a gym, playground, clubroom, pool and theater.

Casa Azure will also feature high-end amenities, including a pool, clubhouse, library and fitness center. The development also utilizes solar panels on the roofs of its carports and ION water systems to help save energy and water.

The quality of the construction is high, Berger says. “A neutral observer wouldn’t be able to tell the difference between them (Aviara Flats and Casa Azure) and market-rate units,” he says. Reaction from tenants so far has been “really good,” he adds.

Affordable Housing Philosophy
Berger describes Dominium’s general philosophy as “Our goal is to provide affordable housing and a sustainable lifestyle for residents on more of a fixed income.”

April Housing says it prioritizes improving communities and supporting residents while expanding the available supply of affordable housing.

Kathleen McCarthy, global co-head of Blackstone Real Estate, says, “Since we launched April Housing, our focus has been on identifying ways to create and preserve affordable housing. We are excited to partner with Dominium to help deliver much-needed affordable housing in Phoenix.”

“We are excited to partner with Blackstone and April Housing to deliver on our shared commitment to address the shortage of affordable housing in the U.S.,” says Mark Moorhouse, Dominium managing partner and executive vice president. “April’s knowledge and approach to LIHTC investment is impressive, and Dominium could not be more excited about their involvement in the tax credit space.”

Dominium was founded in 1972 and is a national owner, developer and manager of affordable apartment communities with offices in Atlanta, Dallas, Phoenix and Minneapolis.

Owning and managing over 40,000 homes at over 220 properties in about half of all U.S. states, Dominium says it is known for creative solutions to unique and challenging development projects, and property management expertise. Dominium was named a Best Managed Company by Deloitte in 2020.