🎓 Scholars Sanctuary – Ward 5, Tucson, Arizona
Overview
Scholars Sanctuary is a proposed multifamily residential development strategically located in Ward 5 of Tucson, Arizona, near the University of Arizona. Designed to serve the city’s growing student population, the project offers modern, affordable, and high-quality housing options while maintaining profitability and long-term investment appeal.
Market Position
Targeting the university demographic, Scholars Sanctuary provides a cost-effective alternative to competing properties such as The Hub, The Mark, and Ari on Fourth. With two-bedroom units priced at $1,726 and three-bedroom units at $2,207, the project undercuts comparable market rents while offering the advantages of new construction, updated amenities, and improved living conditions.
Development Details
Total Units: 80 (30 two-bedroom and 50 three-bedroom)
Total Area: 84,610 sq. ft.
Average Rent: $23.08 per sq. ft. annually
Vacancy Rate: 5% projected
Construction Period: 2 years
Hold Period: 8 years before sale
Financial Structure
The project’s financing plan includes:
Construction Loan: $14,950,650 at 8% interest, transitioning to
Permanent Loan: $15,847,442.13 at 5% interest (30-year term)
Loan-to-Value Ratio: 75%
Equity Requirement: $4,983,550 (90% investor, 10% developer)
The financial model projects a before-tax IRR of 15.7% and a sale at a 5.5% cap rate in year 8, yielding a forecasted sale price of $27.95 million.
Equity & Returns
The joint venture structure allocates returns in a tiered model ensuring equitable compensation for both the investor and developer. Expected IRRs are 13.61% for the investor and 18.05% for the developer under baseline conditions.
Risk Analysis
A sensitivity analysis shows that even under a more conservative 6.5% exit cap rate scenario, the project remains viable with a 10.9% before-tax project IRR, reflecting solid resilience against market fluctuations.
Conclusion
Scholars Sanctuary embodies the balance of affordability, profitability, and community impact. By addressing the gap in Tucson’s student housing market, it promotes ethical and sustainable development while ensuring stable returns for investors and partners.