By Natalie Nagy
In a sign of continued interest in Puget Sound multi-family properties, two California companies traded an apartment property in Federal Way in a sale that closed on July 1. San Francisco-based St. Regis Properties, a real estate investment and development company, and partner Sequoia Equities acquired the Align Apartments from San Diego-based Red Hill Realty Investment, a property investment and management company. The apartment property sold for $35.75 million, or approximately $340,476 per unit, according to King County public records.
Built in 1996, the three-story, 105-unit Align Apartments is located at 35434 25th Ave. SW. The two-bedroom units range from 878 to 970 square feet and rent between $1,905 and $2,065, while the three-bedroom units total 1,169 square feet and rent between $2,440 and $2,460, according to the Align Apartments website.
The apartment building offers pet-friendly two- and three-bedroom unit options with various in-home features such as wood-burning fireplaces and private patios or balconies. The community amenities include an outdoor pool, fitness center, resident clubhouse, business center and professional onsite management.
The investors secured a $23.9 million in fixed-rate bridge financing to acquire and renovate the property, according to a statement by Northmarq, who helped procure the loan. The Northmarq team was led by Senior Vice President Andy Slaton with key analyst support from Jackie Goldsmith and Soraya Rios.
“Our team was able to source the best terms in a volatile rate environment for a fixed-rate four-year bridge loan with prepayment flexibility to fund the value-add acquisition. Align is an attractive opportunity to acquire a cash-flowing asset with upside in an infill location at a discount to replacement cost,” said Slaton. Financing for the sponsor was arranged through Northmarq’s correspondent relationship with a life insurance company.
The property, located in the vicinity of Tacoma and downtown Federal Way, offers its residents a number of outdoor amenities, such as hiking and camping including proximity to the Mount Rainier National Park. Additionally, the apartment complex provides easy access to a number of retail options that include shopping, restaurants and parks.
According to previous reporting from The Registry, Red Hill Investment Realty acquired the Align Apartments from Madison Residential back in April 2018. At that time, the apartment building sold for $20.85 million, or approximately $198,571 per unit. Red Hill operates nationally in the multifamily sector but focuses primarily on Western U.S. markets including Seattle, Portland and the San Francisco Bay Area, according to the company’s website. In terms of single-asset value-add opportunities, the company seeks to acquire properties for between $20 million and $100 million.
St. Regis Properties focuses on delivering residential assets to primary markets throughout the U.S. Presently, the company owns a number of properties in states that include California, Texas, New York and Florida. On the development side, the company’s focus is also broad, with recent emphasis on the San Francisco Bay Area and more specifically on the Oakland market, according to its website.
The suburban Tacoma and Federal Way multifamily market has been described as an “oasis away from Seattle,” according to a February 2022 Seattle & Puget Sound Apartment Market Dynamics report by brokerage firm Kidder Mathews. The offerings of this market include what the firm calls big-city feels with a considerable discount on rents. This has led to increased demand for apartments in suburban Pierce county, which is recording vacancy at 3.4 percent, according to Kidder Mathews.