By Dees Stribling, Contributing Editor
Everett, Wash.—The buyer of the Lakes by Mill Creek Apartments, a 223-unit garden apartment community in Everett, Wash., has obtained an $18.5 million loan for the acquisition. The property was originally developed in 1986, and is currently 99 percent occupied.
The buyer is an LLC formed by private entities for the express purpose of the acquisition. Centerline Capital Group facilitated the financing, which is through Freddie Mac. Once the new ownership is in place, the property will be managed by Dallas-based Riverstone Residential Group.
Centerline director Peter Clasquin notes that the financing structure will allow the new owner to undertake a moderate amount of renovation, since most the unit interiors are about the same as they were in the 1980s. Once that work is complete, the owner ought to be able to realize higher rents.
Greater Seattle is a hot multifamily market these days, and investors have taken notice, both in Downtown Seattle and in outlying areas such as Everett, which is the seat of Shohomish County and home to a major Boeing assembly plant. According to investment specialist Marcus & Millichap in its Q1 report on the local market, “the low cost of capital and investors’ desire for properties outside the urban core will support transaction volume in the first part of 2014, though rising interest rates could restrain deal flow in the second half.”
Secondary markets such as Everett and Tacoma, where cap rates can average in the low-7 percent range, will be targeted by buyers with higher risk appetites, the company predicts. Overall, investors are paying more now for the privilege of being in greater Seattle than in recent years. The median price per unit for rental apartments in the market was around $100,000 per unit as recently as 2009; by 2013, the median was more than $125,000 per unit.