Pinnacle Reels In 645-Unit Seattle-Area Apartment Property for $110M
- Sep 17, 2010
September 17, 2010
By Barbra Murray, Contributing Editor
Shorewood Heights, a 645-residence apartment community located on Mercer Island, Washington, approximately five miles southeast of Seattle and five miles southwest of Bellevue, has come under new ownership in a transaction valued at just over $109.9 million. The Pinnacle Family of Companies joined forces with a public pension fund represented by real estate investment management firm CS Capital Management Inc. of Los Angeles to acquire the asset from Seattle-headquartered Security Properties Inc.
Home for Shorewood Heights is a 45-acre forested site with the address of 3209 Shorewood Drive. The 96 percent leased apartment complex, which first opened its doors in 1949 and expanded from 568 units to 645 in 2002, can accommodate the development of an additional 124 units. Security Properties has owned the property since 2005, when the company snapped it up from Hal Real Estate Investments Inc. for nearly $140.5 million. “The decision to sell Shorewood Heights at this time was part of a prudent portfolio management strategy,” John Orehek, CEO of Security Properties, told CPE. “We will continue to target both value-add and core multifamily properties in key urban markets such as Seattle that will provide our investors a well-diversified and quality portfolio.”
Pinnacle financed the acquisition of Sherwood Heights through Fannie Mae loan originator CW Capital, and plans to hold the asset in its portfolio for the long term. “There is a lot of money that wants to be put to work and investors are purchasing in the core markets,” Philip Assouad, associate vice president with commercial real estate services firm GVA Kidder Matthews, told CPE. “Flight to quality and flight to core, that is what’s going on now. What’s attractive about the Seattle market is it still has high-tech jobs paying good salaries, and there are no cranes in the skyline, so people think there’s going to be supply constraint, in core markets especially. There are only 1,200 units coming online in 2011–that is a 44-year low.”
Security Properties’ Orehek agrees that the call for apartments in the Seattle market is only going to get louder. “As shifts in population trends, lifestyle preferences and the current economic environment continue to favor rental homes, demand for apartments in prime locations will rise both nationally and in the Seattle metro area,” he said. “The current multifamily rental sector represents a very compelling asset market.”