(Phoenix) The Arizona State Land Department announced that a rescheduled land lease auction generated record-setting results with today’s milestone bid of $68.5 million for a 99-year lease on 124-acres of commercially-zoned land in Scottsdale that should generate more than $1 billion in revenue for Arizona Common Schools.
Scottsdale Vistella, LLC won the land lease following a live auction which had eight registered bidders with interest in 124-acres located on the southeast corner of Pima Road and Loop 101 in the City of Scottsdale.
According to Arizona State Land Commissioner Mark Winkleman, the auction resulted in a final price of $68.5 million which should allow the State to collect over a billion dollars in rent payments over the term of the lease. The prior land lease record was set in 2001, when a 186 acre parcel at I-17 and Happy Valley Road was auctioned, producing $534 million in rent.
Winkleman explained that last month’s scheduled auction had five registered bidders, however there were no bids offered during the April 24th auction. Today’s auction had eight registered bidders with Scottsdale Vistella, LLC offering the only bid during the auction for the appraised value.
“Land development is a complicated process. There was substantial interest in this parcel and the $68.5 million price was aggressive,” said Winkleman. “I am pleased that this bidder was able to achieve this price.”
“This record-setting price shows a very positive market trend, reflecting the strong demand for commercial land in Arizona,” Winkleman said. Last month the Land Department had a record land sale of $149.4 million for 269-acres for residential land in Desert Ridge. Today’s auction set the land lease record for124-acres in North Scottsdale for $68.5 million.
Winkleman explained that the difference between a land sale and a land lease is defined by the types of revenues that the Land Department generates:
- Permanent Fund revenues - revenue from land sales which is deposited into the permanent State Land Trust Fund
- Expendable Fund revenues - revenue from leases as well as interest and prepayments which is distributed to the beneficiary (in this case, Arizona Common Schools) annually
Winkleman explained that today’s land lease will bring a minimum 99-year rental stream of more than $875 million for Arizona Common Schools and that the lease agreement also ensures that the land will remain in the State Trust for the long-term.
“The long-term ground lease will provide over a billion dollars to the State’s education system with the ultimate benefit going to our children,” Winkelman said. “And, because it is lease revenue, as soon as rent is paid, it is delivered to the beneficiaries,” he said.
According to Jeffery Levine, managing partner for Scottsdale Vistella, LLC the company plans to build an industrial, mixed-use development on the site.
“This is an excellent location for commercial development with close proximity to Scottsdale Airport which is an amenity, with excellent access to all areas of the Valley,” said Levine.
The Arizona State Land Department manages 9.3 million acres of Arizona State Trust Land. The proceeds from the sale of land go to the beneficiaries of the Arizona State Land Trust Permanent Trust Fund, primarily Arizona Common Schools, supporting grades K-12. For more information about the State of Arizona Land Department visit land.az.gov or call (602) 542-4621.