Bremerton, Wash.—Los Angeles-based New Standard Equities has acquired the 182-unit Bremerton Gardens on Parkside Drive in Bremerton, Wash. An early 1940s wood-framed, garden-style apartment community, the property was purchased for $13 million in an off-market transaction from a private party. Redwood-Kairos Real Estate Partners supplied the joint venture equity and Freddie Mac the financing through CBRE.
“Every deal has its challenges; however this particular one had more than its fair share,” New Standard Equities founder and CEO Edward Ring told MHN.
“Over my career, I’ve acquired and repositioned only a small handful of properties built prior to 1960, and even fewer built in the 1940s. Not surprisingly, the main challenge in purchasing older vintage properties is in making sure that we’re sufficiently capitalized in order to address aging infrastructure. I had roofers, electricians, plumbers, geologists, and three or four general contractors out to the site during escrow for that very purpose. Once we’re confident that our capital expenditure program is sufficient, we really dig deep into the market to determine the appropriate rents that can be achieved upon the completion of a wide-scale repositioning. Since we’re all about creating fantastic living experiences for our residents, it’s vitally important to us that the market conditions support our level of renovation. We absolutely want our residents to feel they’re getting a good deal—that is, that the improved amenities, unit interiors, and customer service is worth their rental dollar.”
Bremerton Gardens fits New Standard Equities’ strategy of investing in properties with excellent upside potential achieved through strategic repositioning and “heavy lifting” value add, the company noted in a statement. Planned enhancements include new walking paths, signage, landscaping and hardscaping, gazebos, lighting and façade treatments evoking a 1940s village vibe. Units will receive refinished hardwood flooring, upgraded cabinetry, new appliances, paint and countertop treatments. Expected cost of the repositioning will be $3.5 million.
Bremerton Gardens is set on an almost 20-acre parcel, with an average 9.1 units per acre. The community features 113 one-bedroom, 63 two-bedroom and five three-bedroom apartments, as well as one single-family home. Apartments feature spacious floor plans, vaulted ceilings and inlet and mountain views. A laundry center, dog park, viewing platforms, access to waterfront parks and 242 parking spaces are included.
“Keys to this property are the incredible 180-degree views of Puget Sound on one side and the Olympic Mountains on the other. Breathtaking, really,” Ring said.
“In looking at the real estate, I couldn’t help but think that ‘view property’ such as this in any other major metro area along the west coast, if not the world, would command significantly higher rents in relation to non-view properties in the same submarket,” he said. “Here was a case where the view premium was literally being cannibalized by deferred maintenance, lack of amenities and aged unit interiors. When we cure the asset’s deficiencies, including building new amenity spaces and infusing the community with character and charm that reflect the romance and simplicity of a bygone era, we’re confident that our expected rental premium will be realized.”
Jim Jensen and Kenny Dudunakis from Berkadia represented both buyer and seller in the transaction. New Standard Equities has acquired two other properties in the region over the past six months, bringing its investment in the region to $26 million since August.