Home Commercial Heitman to Earn Low Four Cap Rate on Dimension Acquisition

Heitman to Earn Low Four Cap Rate on Dimension Acquisition

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By Jon Peterson

Chicago-based Heitman will be achieving a 4.2 percent cap rate on its purchase of the 298-unit Dimension by Alta apartment complex in Seattle, according to sources that track this kind of information in the Seattle marketplace. This return is based on the current rent being produced by the property.

Heitman declined to comment when contacted for this story. Both the buyer and seller in the transaction were represented by the same company, the Seattle office of CBRE. The brokers involved were Jon Hallgrimson, Frank Bosl and Eli Hanacek. The seller of the property was Wood Partners, which is based in Atlanta. This apartment investment and development company has a regional office in Seattle located at 1420 Fifth Avenue, according to its Web site.

Dimension is located at 225 Cedar Street. This puts the property in the Belltown/Downtown/South Lake Union sub-market for apartments in Seattle, which has a current vacancy of 5.5 percent. The actual vacancy in the property Heitman bought is 7 percent.

Heitman paid $144 million for the property or $483,000 per unit, according to sources familiar with the transaction. This was an all-cash transaction. The complex was built by Wood in 2014, and it covers 27 stories. The project is split up into four different kinds of units; 192 one bedroom, 70 two bedroom/one bath, 26 studios and 10 two bedroom/two bath. The project has room for 194 parking spaces.

Heitman is known as a national player of buying core and value added investments. It has an investment strategy of mostly investing in the main property types of office, industrial, retail and apartments. The real estate manager can invest for a variety of capital sources. One of these is its open-ended core commingled fund, Heitman American Real Estate Trust. At the end of last year, this commingled fund had a gross asset value of $5.9 billion. Heitman also buys properties for pension funds and other institutional investors on a separate account basis.