By Jack Stubbs
Activity in the multifamily market in the Puget Sound region shows little signs of abating, and an apartment community in Snohomish County is coming to the market for a significant sum.
According to a report by CoStar, bids for the property are expected to come in at about $100 million, or approximately $195,000 per unit, a figure that would translate to a cap rate of about 5 percent.
Chicago-based Waterton Associates, a real estate investor and property management company that focuses on multifamily apartments and hospitality properties, is the current owner of the property. Waterton acquired the property from Vancouver, WA-based Holland Partners for $80.5 million, or approximately $157,000 per unit, in September 2015. The cap rate on the transaction was 5.7 percent, according to sources that track this kind of information in the Seattle market.
CBRE is leading the marketing efforts on the behalf of the owner. Those efforts are led by Jon Hallgrimson, vice chairman, who works out of the company’s Seattle office. Hallgrimson did not respond to calls or email for comment in time for the publishing of this story.
The three-story Taluswood Apartments, located at 4208 236th Street SW, in Mountlake Terrace, was built in 1986 and contains 512 units. The apartment complex offers a mix of one-, two- and three-bedroom units, according to the web site for the property. The one-bedroom units are 644 square feet and rent for between $1,355 and $2,220 and the two-bedroom/one-bath units are 884 square feet, with rents between $1,675 and $2,335. The two-bedroom/two-bath units total 908 square feet and rent for between $1,520 and $2,730, while the largest three-bedroom units total 1,208 square feet and rent for between $1,970 and $3,640.
The property is currently 95 percent occupied, and Waterton Associates has has completed upgrades on several of the apartment units, according to the CoStar report.
Some of the prominent in-unit amenities include fireplaces, wood-style flooring, vaulted ceilings in select units and patio/balcony. Some of the property amenities available to residents include a fully-equipped fitness center, heated outdoor swimming pool, on-site property management and maintenance services and a creekside walking trail.
The asset is approximately one mile east of Mountlake Terrace and 14 miles north of downtown Seattle. The property is also about 2.5 miles from access to the intersection of Interstate-5 and Washington State Route 104.
Founded in 1995, Waterton executes value-add strategies and manages a national portfolio of multifamily and hospitality property on behalf of institutional investors, family officers and financial institutions, according to the company’s web site. Waterton manages its investments through wholly-owned property management subsidiaries across 15 major metropolitan markets across the country. As of March 31, 2018, Waterton’s portfolio comprised approximately $4 billion in real estate assets, including 40 multifamily investments totaling approximately 12,800 units and 8 hotels with more than 2,000 rooms.
Taluswood is the only Puget Sound region asset in Waterton’s portfolio, which also includes properties in California, Colorado, Texas and Illinois, among other locations.
Waterton has been active in Snohomish County in recent months. In late September 2017, the company sold the 155-unit Martha Lake Apartments in Lynnwood to Irvine, California-based Sares Regis Group for $34.8 million, or approximately $224,500 per unit.
The multifamily market in the Seattle-Tacoma metropolitan area is set for expansion in the coming year, according to a 2018 Multifamily Investment Forecast Report written by Marcus & Millichap, which highlights how the current development boom in downtown Seattle is prompting more companies to locate in the region. As technology companies continue their rapid pace of hiring, demand for housing across the Seattle-Tacoma metropolitan area (encompassing King, Pierce and Snohomish Counties) demand for housing will remain at heightened levels, according to the report.
A combination of rising household growth, robust rent increases and strong investors will keep investors active in the Seattle-Tacoma metro throughout 2018, and private investors will expand their search parameters to include assets in Pierce and Snohomish Counties. The report emphasizes how buyers will be active in the outlying cities of Everett, Lynnwood and Tacoma as assets often trade with cap rates that are at least 100 basis points above similar properties in Seattle’s urban core.
The sale of the Taluswood Apartments follows on the heels of a variety of other residential and commercial sales in Mountlake Terrace in recent months. In July 2017, Bellevue-based Pacific Living Properties acquired the 70-unit Quartz Creek Apartments from San Francisco-based Hamilton Zanze & Company for $13,425,000, or almost $192,000 per unit. On March 15th, Westport Capital Partners acquired the 329,964 square foot Redstone Corporate Center—which includes one Class A building in Lynnwood and another in Mountlake Terrace—for $70.8 million from Los Angeles-based PCCP. And on June 5th, commercial developer Rainier Pacific Properties acquired five parcels of vacant land in Mountlake Terrace totaling roughly 15 acres for $17 million from Woodinville-based Sierra Construction Company.