By Jon Peterson
Beverly Hills, Calif.-based Kennedy Wilson has acquired the 230-unit Alara Harbour Point apartment complex in Mukilteo at a cap rate in the range of 4.8 per to 4.9 percent. “This level of return is based on the property’s current net operating income being produced,” says Kurt Zech, president of Kennedy Wilson Multifamily Investments. He works out of the company’s regional office in San Francisco.
The buyer paid $46.4 million for the property. The new owner was not able to identify who the seller was. The listing agent on the sale was CBRE.
“The location is strong as its near where Boeing has an existing operation, and I would think that some of the Boeing employees would be renters in our complex.”
Kennedy Wilson is planning on making some improvements to the interior of the units. “We are figuring on investing $10,000 to $12,000 per unit to upgrade that part of the property,” said Zech. The property, which was first developed in 1998, is today 98 percent occupied, which reflects how tight the market is for apartments in the area.
The property is located in a robust location, close to one of the major employers in the region. “The location is strong as its near where Boeing has an existing operation, and I would think that some of the Boeing employees would be renters in our complex,” said Zech. The property sits on 12 acres within a master-planned community near the Seaway Center Business Park and Paine Field Airport.
Kennedy Wilson owns one other property in the Seattle market. This is the 383-unit Tivalli complex in Lynwood located at 15707 Ash Way. The cap rate on this deal was five percent, based on where rents will be once the property is stabilized.
The property was completed in 2014 and is currently 85 percent occupied. This was an off-market deal between Kennedy Wilson and Seattle-based Goodman Real Estate. The purchase price of the property was $94.3 million.
Kennedy Wilson is a big believer in the Seattle market. “The greater Seattle market is now a very strong and diverse economy. The city of Seattle added 60,000 new jobs in 2015, which is 20 percent more than it added in both 2013 and 2014. You have companies in that market like Boeing, Amazon, Microsoft and Bank of America,” said Zech.