MG Properties Grabs Seattle’s Park at Northgate Apartments for $22.3M
- Sep 26, 2011
September 26, 2011
By Barbra Murray, Contributing Editor
Investor interest in the Seattle apartment market continues to grow and MG Properties Group is among the latest to snap up a property. The company purchased the 146-unit Park at Northgate from Triad Villa Roma L.L.C. for $22.3 million.
With the assistance of George Elkins Mortgage Banking Co., MGPG secured a loan of approximately $17.4 million from Guggenheim Commercial Real Estate and Pillar Multifamily L.L.C for the acquisition. “We were able to overcome some complex challenges in structuring the financing for the purchase and locked in long-term, fixed-rate financing at an attractive interest rate,” Mark Gleiberman, president of MGPG, said. The multifamily housing owner and operator relied on its Private Capital Group, a cluster of high net worth investors, to complete the financing. Northgate last traded hands in 1998, when Triad Villa Roma picked up the property for nearly $9.5 million.
Carrying the address of 10735 Roosevelt Way NE, the apartment community sits near downtown Seattle and about five miles from the University of Washington. Originally constructed in 1967, it consists of six three-story buildings on 5.5 acres. MGPG plans to invest roughly $2 million to complete a renovation program that had gotten underway prior to the purchase. Approximately 90 percent of the presently available residences are occupied. The company anticipates that the upgrades will help lure renters on the hunt for high-quality accommodations at a middle-market price.
With the acquisition of Northgate, MGPG now has three Seattle properties in its portfolio, which spans the states of Arizona, California and Washington. The company isn’t the only one eager to get a piece of the city’s apartment market, where the fundamentals are highly desirable. “A lot of what’s driving today’s investment sales market is a lack of interest in buying homes, record low interest rates, the rent growth that is taking place and a low level of construction,” Philip Assouad, a vice president of brokerage services with commercial real estate services firm Kidder Mathews, told Commercial Property Executive. “In 2010, new supply was at a 40-year low. And with the housing market being so distressed, apartment owners are starting to see rents pick up.”
Increasing demand for rentals in metropolitan Seattle is predominantly the result of the city’s recovering jobs market. “Our major employers are Amazon, Boeing and Microsoft and the Bill & Melinda Gates Foundation just opened its new headquarters so that will be a big shot in the arm,” Assouad added.
As more and more investors avail themselves of opportunities in the greater Seattle market–for an aggregate $161.6 million, Essex Property Trust Inc. just bought the 63-unit Bernard in Seattle and the 882-unit Redmond Hill, the largest apartment complex in the State of Washington–price tags are going higher and higher. “It’s fair to say that we’re back to 2005 or 2006 pricing,” Giovanni Napoli, a vice president with Kidder Mathews, said, speaking to CPE. “There’s been a 20 to 25 percent growth in value over the last year, 30 percent if you’re talking core downtown locations in Bellevue or Seattle.”
However, investors are not so keen on putting dollars on the table for new projects. “People are more comfortable acquiring existing assets because of the perceived safety as opposed to new developments, which have a higher risk.” Napoli noted.