Phoenix Realty, Hanover Acquire 2 Seattle-Area Properties for $79M
- Jan 14, 2020
Citing the strong local economy and population growth, joint venture partners Phoenix Realty Group and Hanover Real Estate Investors have acquired two apartment communities in the Kent, Wash., submarket for $79 million in a value-add play. Lake Meridian and Royal Firs, with a total of 361 units, were owned by the same individual who sold the Seattle area-properties as a portfolio.
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PRG and HREI did not identify the seller. However, Yardi Matrix data reported both properties were owned by Peter C.C. Wang. It was unclear how long Wang owned Royal Firs, a 186-unit asset located at 24028 110th Place SE in Kent. Wang owned Lake Meridian, located at 14901 SE 272nd St., in Covington, Wash., since April 2000, when he paid approximately $9.6 million for the 175-unit asset, or $60 per square foot, according to Yardi Matrix data. Yardi Matrix recorded the recent Lake Meridian sale to the joint venture at $39.6 million, or $247 per square foot and noted it was subject to a $32.9 million loan originated by Mesa West Capital. No current sale or loan information on Royal Firs was available.
PRG will operate the rental communities and plans to renovate and modernize them. The properties will be rebranded under PRG’s proprietary brand, Alvista Communities, with Lake Meridian being renamed Alvista Lake Meridian and Royal Firs being renamed Alvista 240.
PRG expects to acquire additional properties in the Seattle area, Keith Rosenthal, PRG’s president & co-founder, said in a prepared statement. Rosenthal said the presence of major employers like Boeing, Amazon and Microsoft along with a wide range of outdoor activities makes the market a compelling region for renters of all ages.
Ash Baraghoush, HREI senior director, stated PRG’s experience in repositioning should create significant risk-adjusted returns for the joint venture. Baraghoush also cited the strong population growth of the Seattle market and the limited supply in the Kent submarket as additional reasons for the investment.
The properties both feature leasing centers, fitness centers, tot lots, pools and covered parking. Units have washer-dryers, fireplaces and vaulted ceilings as well as private patios or balconies. Royal Firs, built in 1987, has 18 buildings on 7.8 acres and an occupancy of about 95.2 percent. The property has one-, two- and three-story floorplans with rents ranging from $1,276 to $1,943 and an average of $1,490 per month, according to Yardi Matrix data.
Lake Meridian has 18 buildings on nearly 8 acres with a view of Mount Rainier. Built in 1986, occupancy is at about 98.3 percent. The property has one-, two- and three-story floorplans with rents ranging from $1,288 to $1,758 and an average of $1,534 per month, according to Yardi Matrix.
Both apartment communities have access to highways, which offer commutes of about 20 miles to Renton, Wash., Bellevue, Wash., and downtown Seattle. The properties are near Kent Station, an open-air urban village with shopping, dining, entertainment, a transit station and a branch of Green River College. The apartment communities are also close to major parks, including Lake Meridian Park, which features a 150-acre lake with swimming, boating, fishing and picnic areas.
Demand for Seattle area apartments remains elevated due to the market’s strong economic expansion and good demographic trends, according to the Yardi Matrix Seattle Multifamily Fall 2019 report. The occupancy rate in stabilized properties has risen 40 basis points year-over-year to 95.8 percent as of September. Yardi Matrix reported developers added more than 9,900 rental units through the first 10 months of 2019 and were on track to surpass 10,000.
As of October, 20,852 units were under construction while another 70,500 were in the planning and permitting stages. New jobs are fueling the need for those new units. Seattle gained 61,100 jobs in the 12 months ending in September for a 3.1 percent rate of employment growth year-over-year.
Multifamily investors, like PRG and HREI, have been active in the market as well. Investors paid $3.4 billion for apartment assets in 2019 through October, according to the Yardi Matrix report. Kent was third in the top eight submarkets for transactions from the November 2018 to October 2019 period with $270 million in deals, the report noted.