Tucson Portfolio

Multifamily Portfolio in Tucson, Arizona

Turnstone Capital

Minimum Investment:



Invest Now

Targeted Hold Period:
3 years

Units Available:
106 Units

Fairway America and Turnstone Capital (the “Co-Managers”) are joining forces to acquire a multifamily portfolio in the Garden District of Tucson, Arizona. The 106 total units span across three properties situated near multiple hospitals, including the prestigious Tucson Medical Center (607 beds), and the University of Arizona (51,000+ Enrolled Students).1

The Co-Managers intend to implement a $3.11M value-add renovation plan to update both interiors & exteriors over a 3 year period. This is Fairway’s first investment with Turnstone Capital.

Investment Summary

  • Attractive Going-In Basis: The properties were sourced off-market and are being acquired at what we believe to be an attractive going-in basis of less than $92K per unit and a 5.5% cap rate on trailing 12-month financials.
  • Well Located: The properties are located conveniently close to one another, allowing us the opportunity to maximize operational efficiency using shared resources. They are also close to downtown Tucson and the University of Arizona, which we believe make them well suited for rental income growth.
  • Value-Add Strategy: We plan on investing $3.11M in exterior improvements and modernizing the interiors, which we expect will generate an average rent premium of $300/mo per unit.
  • Partnership with Experienced Property Manager: We’ve partnered with Atlas Real Estate to handle the day-to-day property operations, leveraging their scale and experience in an effort to reduce costs and create efficiencies. They bring vast experience across multiple states and have already pre-assigned materials costs due to their strong relationships within the marketplace.
*The business strategy is subject to change. There are many risks to participating in this opportunity. See “Risk Factors and Fee Disclosures” in the Offering Memorandum for a discussion of some of these risks, including loss of capital, illiquidity, lack of diversification, and capital call risks. This opportunity is unsuitable for investors who are not prepared to hold their ownership position indefinitely and who cannot afford a complete loss of capital.

1 The University of Arizona Institutional Profile, January 2023

Property Summary

Property Name
AZ Commons
3653 E 2nd
Monte Vista Commons
3949 E Monte Vista
Craycroft Commons
1511 N Craycroft
Property Name
City / State
AZ Commons
Tucson, AZ
Monte Vista Commons
Tucson, AZ
Craycroft Commons
Tucson, AZ
Property Name
Property Website
AZ Commons
Monte Vista Commons
Craycroft Commons
Property Name
Year Built
AZ Commons
Monte Vista Commons
Craycroft Commons
Property Name
Total Units
AZ Commons
30 units
Monte Vista Commons
36 units
Craycroft Commons
40 units
Property Name
Avg. Unit Size
AZ Commons
590 SF
Monte Vista Commons
945 SF
Craycroft Commons
543 SF
Property Name
Expected Hold Period
AZ Commons
3 years
Monte Vista Commons
3 years
Craycroft Commons
3 years
Property Name
Total All-In Cost
AZ Commons
Monte Vista Commons
Craycroft Commons


The information provided in this FAQ is intended only to supplement an investor’s review of the formal Offering Memorandum. All projections, targets, timelines, or business plans described below are preliminary, may not be achieved, and are subject to change. Like all real estate investments, this opportunity is speculative and involves substantial risks including, but not limited to, illiquidity, lack of diversification, complete loss of capital, construction/renovation risk, default risk, and capital call risk. No investment decision should be made based solely on the information in this FAQ. Each prospective investor should review the formal Offering Memorandum, including the Risk Factors and Fee Disclosures, with competent legal, tax, or other advisers.

How did the sponsor identify this off-market deal?
Turnstone sourced this opportunity off-market through their broker relationship channel, granting them a first look at the deal before undergoing a full marketing process. The current owners elected to dissolve their partnership which prompted this portfolio sale.
This asset will consist of three apartment complexes (AZ Commons, Monte Vista Commons, and Craycroft Commons). How close are they to one another, and does this provide any challenges or benefits?
The complexes are all within only a few miles of each other, located on the East side of Tucson. We’ve partnered with Atlas Real Estate, an experienced property manager, who will handle the day-to-day property operations. They won’t have any managers on site and will leverage their scale and platform to reduce costs and improve efficiencies between the properties.
What sort of debt did we receive on the deal, and how does it compare to the market?
We have received a term sheet from KeyBank for bridge financing to help capitalize on the project’s acquisition and provide additional funding for future construction costs. The debt terms have not been finalized, but the debt was quoted at SOFR + 265 bps, which results in an all-in interest rate of approximately 7.24% based on SOFR today. While not required, we anticipate purchasing an interest rate cap with a 4.50% ceiling on SOFR, locking in our rate at a maximum of 7.15%. These terms are subject to change.2
Is there a demand for affordable apartments in Tucson
Yes, there is pent-up demand for affordable apartments in Tucson, AZ. According to a housing market study conducted by the City of Tucson, Pima County and the University of Arizona, since 1990, population growth has consistently outpaced the addition of new housing units in the Tucson region.3 Furthermore, figures prepared by the National Low Income Housing Coalition show a deficit of approximately 25,400 affordable and available rental units in Tucson, further justifying the need for more reasonably priced apartments.4 Additionally, Turnstone has witnessed the demand for affordable units first-hand in their other multifamily projects in the Tucson market, with the average occupancy exceeding 95%.
How close are the properties to the University of Arizona?

The three properties range from approximately 2-5 miles away from the University of Arizona or about a 7 to 12-minute drive away. Specifically, the distances for the three properties are as follows:

  • AZ Commons – 2.2 miles (7-minute drive)
  • Monte Vista – 4.0 miles (10-minute drive)
  • Craycroft Commons – 4.6 miles (12-minute drive)
What happens in the first six months after acquisition? Will this property undergo immediate closure and renovations, or will we renovate units as they expire?
We intend to begin renovations in the first month, and anticipate it will take about 13 months to complete all the in-unit and exterior renovations. We expect to renovate eight units per month across the portfolio as leases expire and tackle the exterior renovations in the earlier months of our construction timeline.
Who will do the construction and property management?
Atlas Real Estate will be our partner for both construction and property management. Atlas is the project manager (“PM”) for all of Turnstone’s Colorado portfolio and will soon take over the PM for Turnstone’s sub-institutional portfolio in Phoenix and Tucson. Atlas has full scopes and material bids for each unit and continues to re-quote for further cost savings. We believe this is crucial for our quick and efficient renovation timeline. Separately, Atlas underwrites all deals alongside Turnstone prior to going under contract to align on proforma rents and realistic operating expenses. Atlas has three staff members dedicated to Tucson’s portfolio alone. Although there is always a risk of unforeseen delays, we believe all of the preliminary preparations done by Atlas and Turnstone will help minimize this risk.
We have a cap ex budget of about $30k per door. What are the major Cap Ex items that will be addressed?

The construction program contemplates both interior and exterior renovations for all three properties. Here’s a quick summary of the major renovation items identified in our scope of work:


  • Replacing A/C units,
  • Converting an existing playground to a dog park,
  • Building a trash enclosure area,
  • Sewer line remediation,
  • Improving the structural integrity of the exterior walkups, and
  • Restriping and recoating the parking lots


  • We’re targeting a full rehab of the interiors to bring the units to market. Atlas, who will be conducting the renovations, has prepared a bid for every single unit, including a breakdown of pricing and material costs per unit. A detailed summary of those bids will be uploaded to our deal room for investor review.
When do we expect to be finished with the construction work?
We are projecting construction completion by the end of the first year. With 106 units in total, this translates to interior unit renovations of approximately 9 units per month, which we believe is achievable barring unforeseen circumstances.
What rents will we look to charge after the units have been renovated, and how does that compare to comps?
We are targeting average post-renovation rents of $906 per month for studios, $1,228 per month for one-bedrooms, and $1,463 per month for two- and three-bedroom units. There is no guarantee that these rents will actually be achieved, but based on our review of local market comparables through Costar Property Summary Reports and Yardi Matrix Property Composition Reports,5 as well as current lease rates at Turnstone’s other Tucson multifamily projects, we believe these rents are in-line with market rates. Furthermore, our selected property management group, Atlas Real Estate, has reviewed and agreed with our target rental rates.
Who are the target renters for this property?

We are targeting a blend of workforce housing & market-rate renters at the three properties. All three projects boast near proximity to three of the largest medical centers in the Tucson area, including:

  • University Medical Center – 649 beds, 6
  • Tucson Medical Center – 600+ beds,7 and
  • St. Joseph’s Hospital – 486 beds8
When do we expect the asset to cash flow?
Based on our current projections, we expect the portfolio to produce positive cash flow within the first 9 months following acquisition, with our first distribution projected in Q4-2023 barring unforeseen circumstances.
When do we plan to exit, and how did we determine our exit projection/per unit exit/exit cap rate?
We intend to dispose of the portfolio at the end of year 3 at a spot exit cap rate of 5.5% for $173k per door. Our exit projections are in line with where comparable product is trading today. A 35-unit 1970s vintage apartment building that was recently renovated is under contract to close / waived DD for $195k per door. Although circumstances and markets are anticipated to change over the projected hold period, we believe this comparable property transaction is a good indicator that we have a likelihood of achieving our exit projections as underwritten.
If market conditions worsen and we can’t exit in month 24 at our targeted sale price, what will we do?
A risk mitigant for this scenario is our ability to potentially refinance the Property. We are assuming we can secure an amortizing, 5.50% fixed rate debt option (potentially a bank or agency) at 65% LTV / 1.4x DSCR at the end of month 24. This would allow the Co-Managers to pay down the senior loan at a cheaper cost of capital and be more flexible in sale timing
2 Actual loan and equity amounts and interest rates will be determined at closing and are subject to change.
3 https://mapazdashboard.arizona.edu/gap-analysis-overview
4 https://reports.nlihc.org/gap/2019/az
5 Costar Property Summary Reports, February 2023 and Yardi Matrix Property Composition Reports, February 2023
7 https://www.tmcaz.com/about-tmc/
8 https://www.carondelet.org/locations/detail/st-josephs-hospital