Value-Add University District Portfolio Commands $20M
- Oct 23, 2018
Seattle University District Limited Partnership has acquired the Tyee Apartments and Levere Apartments—a two-property portfolio of student housing communities near the University of Washington— for $20 million from Kennedy Tyee LLC & Levere LLC.
A Colliers International team comprising Tim McKay, Dan Chhan, Sam Wayne and Arvin Vander Veen facilitated the portfolio sale. The transaction marks the first time the assets have changed hands in more than five decades.
“It’s a tier-one university in a major metropolitan city on the West Coast next to rail and a changing neighborhood with high-rise buildings,” Dan Chhan, Colliers’ senior vice president, told Multi-Housing News. “It’s also core plus. There are 88 existing units with space pockets in the basement to create new units, and you can renovate units to improve rents, so there’s lots of upside here.”
Located at 4115 Brooklyn Ave. NE, the 1963-built Tyee Apartments community consists of 48 units in a mix of studios and one-bedrooms. Nearby, at 4105 Brooklyn Ave. NE, the Levere Apartments offer a combination of 40 studio, one- and two-bedroom units. The brick building was constructed in 1927.
While the buildings themselves don’t have many amenities, a walk out the front door and residents will be faced with the University District, known for its plethora of amenities. Both properties are situated only two blocks from the University of Washington campus and a similar distance from the Link light rail station at the northwest corner of NE 41st Street and Brooklyn Ave. in the University District, which offers a number of dining and shopping venues.
“The sellers had an estate tax they needed to pay and were looking to get out of Seattle and move on,” Sam Wayne, Colliers’ vice president, told MHN. “There was a ton of interest. We did a full marketing process with multiple rounds of tours and multiple rounds of bids.”
Rare High Rise-Zoned Land
According to Chhan, the opportunity to purchase 88 value-add units on 20,600 square feet of high-rise-zoned land is hard to find in Seattle, which is why the sale attracted both investors and developers.
“Developers saw this as an opportunity because there was high-rise zoning, while investors saw this as an opportunity because of the upside potential on the existing improvements and the land for future development,” he said. “Ultimately, an investor stepped up and was willing to pay a price higher than developers were valuing the dirt alone.”
The new owner plans to remodel the existing properties and hold long-term.
Earlier this month, Quantum Capital Partners secured a $64 million construction loan for The M, a 230-unit student housing community serving students at the University of Washington.
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Image courtesy of Colliers International