Two apartment buyers find double-digit discounts in Seattle market

Investors have picked up two apartment complexes in Seattle’s South Lake Union in separate deals for double-digit discounts.

San Francisco-based Carmel Properties bought a seven-story, two-building complex with 275 apartments at 1212 Harrison Street for $92 million, or $22 million less than what it traded for five years ago, the Puget Sound Business Journal reported.

The seller of the garishly painted buildings known as the Chroma was IRP, an LLC also based in San Francisco, whose address is the same as Iconiq Capital. 

The deal works out to $334,545 per unit, 19 percent less than its last traded price.

A day earlier, locally based Timberlane Partners bought a seven-story, 278-unit apartment building and a 32,000-square-foot office building leased to Amazon.com at 1280 Harrison Street for $115 million, according to the Business Journal.

The seller of the Stack House Apartments and historic Supply Laundry Building in the off-market deal were unidentified institutional investors advised by J.P. Morgan Global Alternatives.

The 118-year-old, brick-and-beam Laundry Supply still flies a 140-foot smoke stack, for which the apartments are named. In 2014, Amazon inked a 10-year lease for 26,000 square feet of offices. The remaining space is occupied by ground-floor restaurants.

The $115 million price is a quarter less than the property’s assessed value of nearly $154 million, according to the Business Journal. It’s also $35 million, or 24 percent less, than what developer Vulcan Real Estate sold it for nine years ago.

Timberlane has snapped up apartment properties at double-digit discounts across the region, acquiring 719 apartment units for more than $250 million, or $347,705 per unit.

The company says that makes it the most active multifamily investor in the Pacific Northwest, a market where investment deals have all but dried up.

“With values this far below replacement cost, now is the time to buy the best assets in the best locations,” Timberlane Managing Director Jon Hallgrimson said in a statement. “Stack House is exactly that.”

He helped broker the 2015 sale to J.P. Morgan and said when it came on the market now, “I knew we should jump on it.”

The complex is 96 percent leased, and its new landlord isn’t offering tenant concessions, said Timberlane.

The low price of apartments coincide with an anticipated rise in rents in the next couple of years because of a lack of supply, as higher financing costs suppress construction starts, according to the Business Journal.

South Lake Union, on the lower shore of Lake Union two miles north of Downtown Seattle, has become a local hub for Amazon and biotech firms, as well as trendy bars and restaurants.

In December, Carmel Partners bought a 243-unit apartment building at 4720 Rainier Avenue South, in the Columbia City neighborhood of Seattle, for $97 million. The deal works out to $399,177 per unit. 

— Dana Bartholomew

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