By Jon Peterson
Bethesda, Md.-based ASB Real Estate Investments has acquired its initial two apartment properties in the Seattle market with the $90 million all-cash acquisition of the 108-unit REO Flats and the 92-unit Sunset Electric complex.
“We had been looking at the Seattle market for the past two and a half years or so. We think that Seattle has a good economy and has been producing solid job growth for some time,” says David Quigley, chief investment officer for ASB Real Estate. He works out of the company’s regional office in Palo Alto, Calif.
REO Flats is a property located at 1525 4th Avenue. The apartment units are 94 percent leased. There is a retail component to the asset that has no vacancies. This totals 7,241 square feet and is leased to two restaurants, a coffee shop and a sustainable toxin-free dry cleaner. The new owner acquired the property from a joint venture of Seattle-based Madrona Real Estate and New York City-based Glenmont Capital Management.
The Sunset Electric asset is a seven-story complex that is almost full with a current occupancy of 98 percent. The asset is located at 1111 East Pine Street. It has nearly 6,000 square feet of retail. All of this space is taken by a restaurant. The seller of the property was Scottsdale, AZ –based The Wolff Company. The firm also has a regional office in Seattle at 911 East Pike Street.
ASB bought the property for its core open-ended commingled fund, the ASB Allegiance Real Estate Fund. This means the fund is always open to new commitments from investors, compared to closed-end funds that define the specific time period to raise capital. It has gross real estate assets of around $5 billion as of the end of 2014, according to a document received from one of the investors in the fund. There are a total of 298 investors in the fund and 71 investments in it.
Through the end of last year, the Allegiance Fund had almost 22 percent of its fund invested in apartments and nearly 30 percent of the commingled fund’s portfolio was located in the West. The commingled fund buys properties nationwide and mostly acquires a mixture of office, retail, apartments and industrial assets.
The commingled fund was formed in 1984. It had a loan-to-value ratio of 18.64 percent as of the end of last year. It has a current entry queue of $664 million. This is capital committed to the fund by investors and the manager is waiting to call down for acquisitions or if an existing investor decides to exit the fund.