Home Finance Developer Sells Land Off Beneath Newly-Completed Seattle Apartment Complex for $18.5MM

Developer Sells Land Off Beneath Newly-Completed Seattle Apartment Complex for $18.5MM

Safehold, Wilshire Capital Partners, Tellus on Dexter Apartments, Seattle
Image Courtesy of Wilshire Capital Partners

By Meghan Hall

A local developer has sold off the land beneath one of its latest projects to a regional tech giant in an interesting move that could provide insight into how commercial real estate companies plan for their future in the region. In a transaction that closed on October 13th, El Segundo, Calif.-based Wilshire Capital Partners sold off the land beneath the Tellus on Dexter Apartments for $18.5 million. The buyer was 403 Dexter Avenue North Ground Owner LLC. Based on public records, the buyer is affiliated with New York-based Safehold Inc., a firm that specializes in modern ground leases.

The property is located at 403 Dexter Ave. N., and Wilshire completed building out the 98-unit property in 2019. Designed by VIA Architecture, the eight-story building features studios, one- and two-bedroom apartment units. Amenities include a rooftop deck, fitness facility, lounge are and 50 parking spots. The development also features 2,588 square feet of ground level retail space. 

The asset is well located, just off of State Route 99 and within walking distance of the University of Washington Medicine Research Facility, the Museum of Pop Culture and the Bill & Melinda Gates Foundation. Amazon, the Space Needle and popular eateries, such as Portage Bay Café are also located nearby.

Wilshire will remain in possession of the development but has executed a ground lease, according to public records. On its website, Wilshire states that part of its asset management strategy is driven by regularly evaluating capital event opportunities. The firm, while it seeks to maximize income and tenant retention, also focuses on creating multiple exit strategies.

Safehold Inc. seeks to “revolutionize real estate ownership” by allowing land owners to tap into the value of the land beneath their buildings. The firm targets the top 30 MSAs in the United States and has executed $2.8 billion in ground leases as of June 2020. Approximately 3.3 percent of its portfolio is located in Seattle. Safehold claims that its ground lease structure provides stable, long-term capital source that decreases interest rate and refinancing risk, providing value competitive with other capitalization methods.