In another seemingly endless demand for Seattle-region apartments, Irvine, Calif. -based SARES REGIS just acquired the 238-unit Solara Apartment community in north Seattle from Denver-based Simpson Housing for $65.2 million, or approximately $273,950 per unit. According to public documents, the sale closed on December 15, 2016 and was recorded on the 19th of December.
The apartment complex, which was built in 2002, is located at 12736 Lake City Way NE in Seattle, and it features a mix of studio, one, two and three bedroom homes. The site is in close proximity to University of Washington, Lake Washington, University Village, Northgate Mall and the Burke Gilman Trail, as well as within easy access to US Highway I-5 & Highway 99. Amenities feature a clubhouse, aptly named Club Solara, which has a billiards table, game room as well as a 24-hour fitness center.
Apartment communities in the greater Puget Sound region continue to garner interest from investors, both local and those across the country. Complexes from Everett and Bothell, to Redmond and Renton, as well as in Seattle proper, have been selling at a steady pace in the last quarter, hitting new highs both in volume of sales and number of transactions.
Occupancy in the regional market is sub 5 percent, and according to HomeUnion, an online real estate investment management firm, Seattle tops the company’s single-family rental market rates with a 6.7 percent year-over-year growth.
SARES REGIS, which has been an active apartment holder in the Western United states had announced its intentions earlier this year in putting more of its investment might into the Puget Sound region. It September of this year, the firm announced that it had raised $300 million in equity for its Sares-Regis Multifamily Value-Add Fund II, seeking to acquire approximately $850 million of assets in its target markets. One of those markets is in the Seattle region.
“We are very pleased to have exceeded our target raise of $250 million, bringing together a number of repeat investors from our first fund with several new top tier institutional investors,” said Ken Gladstein, the fund’s president at the time. Investors in the fund include insurance companies, public pension funds, wealth managers and other institutional investors from the United States, Europe and Asia. “The focused strategy of the fund allows for immediate deployment of investor capital to take advantage of numerous value-add acquisition opportunities in our pipeline,” he added.
However, some warn that there is reason for concern. According to a recently released fourth quarter of 2016 study by Seattle-based Apartment Insights, which looks statistics and trends on 50+ unit properties in the King/Snohomish market, while the vacancy currently sits at 4.67 percent, it had shot up from 3.99 percent from a quarter ago and up from 4.32 percent year-over-year. On the absorption side, Apartment Insights tracked 1,046 units rented, down from 2,043 from the third quarter, and also bringing the rents down slightly in the process. With additional inventory coming on-line and apartments offering strong incentives, the research firm sees some cause for concern.
Yet SARES REGIS sees an opportunity in repositioning assets in the region as a major plus for their investment strategy. “While the real estate cycle for new development of multifamily properties is moving toward the later innings, opportunities to renovate and reposition well located, older properties that have been undercapitalized and/or under managed are abundant,” said Gladstein.