SEATTLE, Sept. 6, 2017 — Security Properties today announced that it has sold the last of the 17 assets that comprised its first closed end discretionary multifamily real estate fund (“Fund I”). The remaining asset, 700 Broadway, was a mixed-use apartment and retail property in Seattle’s Capitol Hill neighborhood. With the completion of this sale, Security Properties concluded a six year process in which 2,471 apartment units across four states, totaling $392.5 million of multifamily real estate, were successfully renovated and sold at attractive returns.
Capital for Fund I was raised from accredited high net worth investors and deployed alongside different institutional limited partners and lenders on an asset-by asset basis over a two year investment period. All of the properties acquired were existing, cash flow generating assets that were enhanced through renovation, rebranding and managerial oversight by Security Properties and its in-house property management affiliate, Security Properties Residential.
The objective of Fund I was to assemble a moderately leveraged, geographically diversified portfolio of multifamily real estate properties that could be improved to generate attractive returns with lower risk than ground up development. The net was result was that, by employing average leverage of 55%, the $20MM invested into Fund I returned a net $48 million.
David Dufenhorst, CEO of Security Properties, stated: “The conclusion of Fund I was an extremely positive outcome for all parties involved. Our goal was to empower private investors to invest in institutional-scale apartment communities through a low volatility investment portfolio that could generate attractive risk-adjusted returns. With the conclusion of Fund I, that objective has been more than achieved.”
The completion of Fund I is a significant milestone for Security Properties. Since forming Fund I, Security Properties has raised four other discretionary investment vehicles from individuals, multi-family offices, and institutions and has directed syndications of individual properties on a periodic basis. Fund I greatly enhanced Security Properties’ investor base and allowed it to expand relationships with several institutional partners that continue to this day.
Ed McGovern, managing director of capital markets, stated “Fund I was raised during a period when the economic outlook was uncertain and capital markets where very tough, especially for ‘first time’ funds, regardless of whether the sponsor had a strong record of performance. Our investors put their faith and us and our entire organization worked as a team to deliver on those expectations. Today we continue to serve them as every investment is as critical to our success.”
About Security Properties
Security Properties is a national real estate investment, development, and operating company headquartered in Seattle, Washington. For more than 48 years, Security Properties has provided quality housing to its residents as well as excellent financial performance for its investors. Since its founding, Security Properties has acquired or developed over 83,000 residential units at a cost of over $5.7 billion. Security Properties maintains a focused multi-family strategy supported by integrated teams of professional acquisition, development, construction, investment, and property management specialists. For more information, visit www.securityproperties.com.
