Epicenter wins NAHB Pillars of the Industry Community of the Year and Best Mixed-Use Development
Security Properties, a nationwide developer of multifamily housing faced tremendous community opposition when it proposed a residential infill project in a newly vibrant neighborhood in north Seattle. Nonetheless, through considerable effort and negotiation, Security succeeded in winning over the community and building a project that captured this year’s Pillars of the Industry Community of the Year award from the National Association of Homebuilders.
The development site identified by Security Properties was located in the middle of the neighborhood’s business district. A vacant 37,000 square foot half-block zoned for neighborhood commercial use with a 65-foot height allowance, the site offered an alleyway for primary ingress and egress. In addition, it is located on several bus lines and provides spectacular upper-floor views of Lake Union. However, neighborhood activists were poised to ensure nothing happened to the site.
According to Security Properties Vice-President John Marasco, “It was a prime site, but one we knew would be controversial. We felt we could build something spectacular that would complement the neighborhood, but we needed to convince them. The last thing we wanted to do was get in a neighborhood fight. It takes time, it takes energy, and it doesn’t necessarily bring the best solution.”
Security Properties put together a design team that consisted of a highly respected local architecture firm, a regional public relations firm, and a diverse set of community leaders. The architect then led the group through the formulation of a mission statement that clarified in writing what was good and unique about Fremont. The entire group, including the architect and developer, agreed they would work together to meet the mission and enhance Fremont.
Marasco reports, “Results have been spectacular.” The project opened for occupancy April 1, 2003, and reached stabilized occupancy in September 2003. It achieved residential rents ranging from $800 per month for its studios to $4,200 per month for its premium two-bedroom unit. The rental range exceeded that projected on opening, although average rents are in line with the project pro forma. The Seattle market has firmed up since the project opened, resulting in increases in rent on turnover apartments as well as renewals. Occupancy has consistently remained over 95 percent since stabilization.
“All told,” comments Marasco, “it’s been a great project. Although the project delivery came right wen rents were sluggish, we still leased up at 20 units per month, well above our projected rates. It is a strong statement about how well the development has been accepted by the community!”
Apartment complexes sell for $57.5M
Three Puget Sound-area apartment complexes have been bought by Security Properties Inc. for $57.5 million. Seattle-based Security Properties (SP) bought Mallard Cove, a 198-unit complex in Everett; Gilman Meadows, a 125-unit complex in Issaquah; and Mountain View, a 241-unit complex in Fife, from Municipal Mortgage & Equity LLC (NYSE: MMA) of Baltimore. SP said it plans to paint the buildings' exteriors, upgrade landscaping, and remodel clubhouses at the properties. SPI acquired Mallard Cove and Gilman Meadows in a partnership with Capmark Finance and Mountain View with a partnership with Equity Resources.
220-unit Hearthstone at Merrill Creek in Everett sold for $38 million
Security Properties of Seattle sold the 8-year-old complex on more than 14 acres to UDR Inc. of Highlands Ranch, Colo. "Institutional-grade product that comes available in one of the top multifamily markets in the country is an attractive buy for the well-funded investor," said Jon Hallgrimson, executive vice president of CB Richard Ellis of Seattle, which handled the deal, in a statement.
40-story Pine Street Tower is approved
A 40-story building with 325 units has won environmental and design approval from the city of Seattle. The building will be located at 815 Pine St., across the street from the Paramount Theatre.
The building's plan calls for 32 floors of residential units above the 4,200 square feet of commercial, restaurant and retail space at ground level. The building will also have parking for 279 cars above and below grade. The developer, Security Properties, has received a determination of non-significance with conditions from the city. Bumgardner Architects designed the building.
Security Properties Closes Largest Upper Manhattan Sale of 2009
NEW YORK CITY-Affiliates of Security Properties sold a nine-building, 229-unit affordable housing portfolio with associated ground-level retail in East Harlem to an affiliate of Pacific Housing Advisors, Massey Knakal Realty Advisors said Friday. The portfolio sold in mid-December in an all-cash transaction valued at $26.9 million.
"Our goals for the transaction were twofold: preserving the affordability of the apartment units while maximizing sale proceeds to the seller," says Tim Overland, managing director of affordable housing at Security Properties, a private Seattle-based multifamily investment group, in a release. "We feel that both goals have been met."
The buildings are known as Met Paca I and Met Paca II, and operate under a Section 8 rent subsidy contract with HUD. The new owner will continue to maintain the portfolio as affordable housing, the release states.
Massey Knakal's Shimon Shkury represented Security Properties in the deal. It was reportedly the largest Northern Manhattan real estate sale of 2009, topping the previous sale of 1428 Fifth Ave. for $21.95 million, also arranged by Shkury and his team. In the release, Shkury, a partner with Massey Knakl, observes, "The buyer and seller struck an excellent deal, and the neighborhood will continue to have an outstanding portfolio of buildings maintained as affordable housing."
In early December, the New York City Housing Development Corp.'s board of directors voted to approve $30 million in tax-exempt Multi-Family Rental Housing Revenue Bonds to rehabilitate the portfolio, which is also known as Lexington Courts.
Questions for: John Orehek
Security Properties is one of the largest owners of multi-family projects in the nation, with more than 170 properties in 37 states. Chief executive John Orehek describes Seattle-based Security Properties as a stool balanced on several legs whose contribution to the bottom line shifts depending on the business cycle. That flexibility has helped the company weather the worst recession since World War II, Orehek says. He shares his views on the economy, real estate investment and the importance of art.
On comparing this recession to previous downturns: I never saw such panic as we saw after the collapse of Lehman Brothers. The panic and uncertainty about where to put money — that was unprecedented. The high level of concern about how risky many of the financial institutions were because of certain derivatives they had purchased or sold made this recession very different.
I do think we will see liquidity move back into the market. Nothing is ever as bad or as good as it seems.
On the market turning around: If we are not at the bottom, we are damn close to the bottom.
On investing in affordable housing: Affordable housing is the sector that for us is probably the least impacted by the recession. We have two transactions afoot now — both financed with stimulus money — in Pennsylvania and should be closing on a third in Texas in the next 30 to 45 days. These properties are existing affordable assets that are eligible for tax credits. When the tax credit market deteriorated, the buyers for tax credits lost their appetite. In certain areas, the government provides through the stimulus act access to capital that allows us to continue to go forward.
On the income property side, we have not bought anything in two years. It’s been a function of trying to manage our revenue and expenses at our properties to keep them servicing their debt and negotiating with lenders to extend debt or take advantage and pay down our debt with the cheaper current interest rates... Part of the reason we have not bought anything is that it’s been very hard to understand where rents will stabilize.
On the development side of the business: It’s fortunate we do not have a lot of properties under construction. The properties we do have under construction are moving into the rent-up stage. We have been fortunate in that the properties we do have under control were not sitting on any land loans or other type of debt that would make us lose sleep at night. We also are taking advantage of what we think is the discount available in the service sector from the professions that provide services to developers – the architects, the lawyers. What we are looking for in this environment are the entitlements on the assets. We will monitor the market to determine when revenue and income from the asset would justify being able to break ground. We are in a holding pattern on development.
On picking investments: We’re going to be trying to take advantage of what we see as the very favorable long-term financial rates and terms out there right now before we see a significant increase in interest rates. One thing we like to look for is current stabilized net operating income that gives us a positive cash flow on our equity — income from the property that will pay the debt service and then some.
On Epicenter, Security Properties’ quirky apartment building in Seattle's Fremont area: They love it or they dislike it but they know it. Epicenter rented up in the low cycle of the tech bust here and it has been very highly occupied. A lot has to do with its location and a lot with its design and art features. Fremont, as you know, has a very eclectic group of citizens and a very strong arts group. One of the conditions of doing that deal was to devote a certain amount of the budget to art. As a result we brought in people who were involved in the art world to help us. They were delightful to work with and crafted some really interesting things. They still come to our Christmas parties. I’m a numbers guy — these folks were fun, passionate and they delivered on time and typically on budget.
On moderation: If you do not try to hit every ball over the fence but just keep hitting singles and doubles, it spreads the risk around. No matter how good the location or how good the pro forma deal is, it does not always work out. If you are banking on one particular deal, it can make you or kill you. We spread our activity around a number of divisions and assets. We will take less profit as long as it’s profit.
Security Properties Acquires Majority Interest in Denver Multifamily Asset
Seattle-based Security Properties today announced it has acquired the general partner and majority economic interests in the ownership of the 140-unit multifamily property in Denver, Colorado, known as Diamond at Prospect. Built in 2005 by an affiliate of Trammell Crow Residential and financed in part under the federal low income housing tax credit (LIHTC) program, the property becomes the latest addition to Security Properties' diverse portfolio of multifamily assets.
"We are very pleased with the outcome of this deal, given the unique nature ofthe transaction," Ilya Gamel, Security Properties' Director of Special Acquisitions said. Under the LIHTC program, the ownership entity is restricted from transferring an LIHTC asset for 15 years from the date the property is placed into service and begins earning its tax credits. While the regulations restrict an outright sale of the property, they do not prohibit the various partners from presently transferring their ownership interests.
However, these types of transfers can be complicated. According to Tim Overland, Security Properties' Managing Director of Affordable Housing, "these transfers are not that common. The typical buyer is an experienced affordable housing operator who knows the governing regulatory agencies and understands the rules of compliance. Such expertise enables the buyer to not only gain the necessary agency, lender and partner approvals to complete the transfers but enhances due diligence and results in a more comprehensive and necessarily vigilant underwriting. Moreover, the buyer must also have the economic capacity to assume the general partner's guarantees to the limited partner for successful delivery of the tax credits as well as for coverage for any operating deficits. These added complexities yield very few buyers in the marketplace who can actually get the deal done," Overland explained.
"Satisfying the unique due diligence requirements of the Colorado Housing Finance Authority, the lender, as well as the institutional limited partner, is cumbersome but well within our capabilities - maintaining engagement with the approval parties throughout the transfer process is essential," added Bryon Gongaware, Security Properties' Director of Affordable Housing.
Security Properties first entered the affordable housing industry in 1969 as a syndicator investing in the development of hundreds of HUD-subsidized multifamily properties throughout the United States during the seventies and eighties. It began valuing and acquiring limited partner interests within its own portfolio in 2000 and more recently embarked on a strategy to acquire general partner interests in LIHTC housing. "It is definitely a niche investment but one that complements the development and asset management work we do in the affordable group," said Overland.
Security Properties operates two other multifamily divisions which focus on asset management and development of market-rate assets in prime and sub-markets throughout western United States. Headquartered in Seattle, Washington, Security Properties owns a portfolio of over 17,000 units in 29 states which serves to bolster its reputation as a national leader in multifamily investment and development.
Security Properties Acquires Downtown San Diego Apartment Complex
SEATTLE, Jul 19, 2010 (BUSINESS WIRE) -- Security Properties is pleased to announce the $22 million acquisition of Entrada Apartments, a 172-unit complex located in downtown San Diego. The property, which is situated in San Diego's East Village neighborhood, is conveniently located one block from the light rail, the Gas Lamp Restaurant and Shopping District, and a short walk to Petco Park, home of the San Diego Padres. David Dufenhorst, Managing Director at Security Properties, is excited not only to re-enter the San Diego marketplace but to further build upon an institutional equity partner relationship that started in early 2008 with the purchase of a 194-unit project in Bellevue, Washington. Entrada was built in 2004 and the new owners expect to spend capital renovating the leasing office, improving the dramatic rooftop common area and implementing a vibrant exterior paint scheme. The joint venture capitalized the acquisition by assuming an existing conduit loan and assumed a modified loan from City Center Development Corporation ("CCDC"). CCDC provided the original developer with $3.5 million of equity to construct the complex in exchange for providing 40 affordable units as part of the project.
The performance of the property is expected to improve when the Thomas Jefferson School of Law completes its relocation from its Mission Hills location to a new building one block away from Entrada. The law school, which has an enrollment of 800 students, is planning for growth to 1,000 students in its new facility along with faculty in excess of 200 people. Given Entrada's large mix of studios and one bedrooms and its close proximity to the new law school campus, Dufenhorst believes that its performance will continue to improve after the law school's opening in January 2011.
DEAL OF THE DAY: HFF Refinances Bridge Loan with $15.6M HUD 223(f) FRM at Attractive Leverage
Fife, Wash.–The Portland office of HFF (Holliday Fenoglio Fowler, LP) announced it has arranged a $15.6 million refinancing for Rainier Pointe, a 241-unit multi-housing community in Fife, Wash.
Working exclusively on behalf of a joint venture between Security Properties and Equity Resource Investments, HFF managing director Casey Davidson and director Tom Wilson placed the 35-year, fully-amortizing, 3.79 percent fixed-rate (excluding mortgage insurance premium) 223(f) FHA loan with AmeriSphere Mortgage Finance, LLC. The new permanent financing replaced an existing short-term bridge loan.
"The 223f program offers multi-housing borrowers the highest leverage in the market at attractive long term rates," says Davidson.
Rainier Pointe is located at 6643 20th Street with direct frontage on Interstate 5 in Fife about six miles from downtown Tacoma and 30 miles from downtown Seattle. The property is currently undergoing renovations to the exterior as well as individual unit renovations. The one-, two- and three-bedroom units average 751 square feet each and are 88 percent occupied.
"The borrower, a major institutional owner of multifamily across the nation, repositioned the asset for the long term by taking advantage of this historically low-interest rate environment. The FHA process is a long and arduous process versus other traditional financing options; however, for those multifamily borrowers who have patience and are seeking maximum leverage and a long-term interest rate solution this is a very compelling loan program," added Wilson.
Apartments are red-hot despite cool real-estate market.
By Eric Pryne, Seattle Times business reporter
After hunkering down for several years, Seattle commercial real-estate developers are mustering up the courage to start building again in 2011.
But, almost without exception, they want to build just one thing: apartments.
Condos? Don't expect any big new projects for years, observers agree.
Office towers? No way, unless there's a big tenant like Amazon.com lined up in advance.
Apartments, in contrast, are red-hot. Developers are racing to get projects permitted, financed and under construction.
"They're chomping at the bit with the market coming back like it is," said Tom Cain, principal with research firm Apartment Insights Washington.
The turnaround began last year as rents in King and Snohomish counties edged up. The vacancy rate dropped. Landlords cut back on incentives like free rent. New buildings leased up quickly.
All are signs of increasing demand. Cain and other analysts say a convergence of economic, demographic and cultural forces should keep the market stoked into 2011 and beyond.
And, because construction tailed off after the economy tanked, relatively few new projects are slated to open this year to accommodate those new renters.
Hence the rush to start building.
HB Capital of Seattle hopes to break ground this month on a 122-unit building in Belltown. Bellevue-based Wallace Properties plans to start building a 105-unit project near Seattle University in February.
Seattle developer Goodman Real Estate has scrapped city-approved plans for an office building near the downtown ferry terminal, and now is seeking new permits to build - you guessed it - a 16-story apartment tower. Another developer on Queen Anne Hill is pulling the same switch.
By Cain's count, the number of apartments in the early permitting stages in King and Snohomish counties jumped 48 percent in the fourth quarter alone.
What's behind this apartment boom? Developers, investors and economists say it's partly because homeownership has lost its allure for many - at least for now - since the real-estate boom went bust.
"They are no longer convinced it's an economic benefit for them to buy," said John Orehek, president and CEO of Seattle-based Security Properties, one of the nation's largest apartment companies.
That could change, said Seattle land-use economist Matthew Gardner, but for now there's no sense of urgency about buying a house or condo. Prices aren't increasing; interest rates haven't risen much yet.
Plus "a lot of people are still just unsure," Gardner said.
So they rent.
The apartment market typically improves when employment grows, insiders say. But this time it has bounced back despite anemic job gains.
Analysts say this turnaround is rooted partly in the real-estate downturn and partly in the 1980s.
That's when baby boomers began having their own babies in large numbers. Those "echo boomers" are mostly in their 20s now. There are a lot of them. More are entering the housing market every year.
And Seattle is attracting a disproportionate share of them. Orehek says they're moving to Seattle for the same reason he relocated here from his native Cleveland 30 years ago: Seattle's prospects seemed brighter.
"It's an incubator that will continue to grow," he said.
State demographers affirm that: They project migration to Washington will nearly double from recession lows by 2012.
The Urban Land Institute, a growth think tank, ranked Seattle the nation's fifth-best market for apartment investment in its commercial real-estate forecast for 2011. One reason: Its attractiveness to young workers seeking "24-hour lifestyles."
During the recession's darkest days many young adults - even those with jobs - lived in their parents' basements, or doubled up in apartments with roommates. Now, landlords say, they're increasingly finding places of their own.
"They went into safe mode," Orehek said. "Now the fear has gone out of a lot of people's minds."
Many are renting rather than buying, by choice rather than necessity. "It's almost a lifestyle for them," John Swanson, who oversees commercial real-estate lending for Umpqua Bank, told a recent industry forum.
They want walkable, vibrant neighborhoods outside rather than a lot of space inside, he said. And they don't want to be tied down with a mortgage.
If they could even get one, that is. It's tougher for people of all ages to qualify for home loans now than before the real-estate bubble burst. And the drop in home values and rise in foreclosures has made many think twice about buying.
"Leveraging into an asset where the value is declining doesn't make any sense," said Cain of Apartment Insights Washington. "People don't want to lose money."
Apartment construction is just about the only kind of commercial real-estate development lenders will consider financing, Swanson and Tracy Edgers, a senior vice president at Wells Fargo Bank, recently told industry leaders.
The downtown Seattle office vacancy rate remains near record highs. "If you talk to me about [financing] office, it would be a short conversation," Swanson said.
And any demand for new condos over the next few years should be met by recently completed complexes, like The Bravern in downtown Bellevue and Thornton Place near Northgate, that were built as condo projects, then converted to rentals when faced with sluggish sales.
They'll convert back when the market improves, Edgers said. As for financing new condo construction, "we haven't even thought about it, because it's so far out there."
Most of the apartment projects now queuing up in the pipeline are low- to mid-rise buildings, cheaper to construct and easier to finance.
But Su Development hopes to start building a 21-story tower in downtown Bellevue this spring. And Matt Griffin of Pine Street Group said he thinks he'll be able to persuade his equity partners to break ground around then on a twin-tower, 24-story project at Sixth Avenue and Lenora Street.
Security Properties holds permits to build two 40-story towers in central Seattle - one at Ninth Avenue and Pine Street, the other on Minor Avenue in the Denny Triangle. It isn't ready to start building them yet - rents haven't risen enough for the projects to pencil out, Orehek said.
However, he added, the market's turnaround has prompted the company to start updating and fine-tuning the towers' designs and cost estimates, to get a clearer picture of when the time might be right.
No one expects that all the projects scheduled to break ground this year actually will. Some almost certainly will encounter permitting delays. At some point, analysts say, lenders will conclude the market is saturated and pull back.
But, until then, "everybody's trying to get their project built quickly," said Wood Partners' Orser, "because the last one is going to be the odd man out."
Security Properties Establishes National Property Management Firm Madrona Ridge Residential
Security Properties Inc., one of the largest multifamily real estate owners in the country, today announced the formation of Madrona Ridge Residential, its new affiliated property management firm. As an affiliate of Security Properties, Madrona Ridge Residential will provide property management services for apartment communities in markets across the U.S.
"Our role as multifamily owners, investors and third-party fiduciary trustees for over four decades gives us extraordinary insight and market knowledge into the rental housing sector. Re-establishing our in-house property management capabilities enhances our ability to improve every aspect of our multifamily investment management and property performance," said John M. Orehek, President/CEO of Security Properties and CEO of Madrona Ridge Residential. "We're pleased to welcome Gail Duke as Managing Director. Gail's wealth of industry expertise and valuable talents will help create exceptional living environments for residents and outstanding value for our investors."
Multi-faceted Services for Residents and Clients
Madrona Ridge Residential specializes in property management services that improve resident satisfaction and maximize value for owners by creating positive resident experiences in apartment living. The company will initially provide management for multifamily assets currently controlled by Security Properties and may eventually offer third-party property management services.
Madrona Ridge Residential also offers services that enhance its overall multifamily management capabilities. They include compliance management to ensure apartment communities meet financial, operational and regulatory compliance, as well as construction management for projects of all sizes.
Experienced Executive Leadership Team
Madrona Ridge Residential's executive leadership team includes seasoned executives with longstanding expertise in multifamily real estate, finance and property management.
Gail Duke brings over 25 years of experience to her new role as Managing Director of Madrona Ridge Residential. Most recently, Duke served as Senior Vice President at the Sares-Regis Group, and Vice President at Belkorp Holdings, Inc., where she established Seattle-based offices responsible for overseeing the Pacific Northwest and Northern California territories. Previously she held executive management roles at Riverstone Residential Group and Trammell Crow Residential overseeing operations in the West. Duke studied engineering at West Virginia University and holds a Real Estate Broker's license for the State of Washington.
"Security Properties was a trusted client of mine for years. I'm thrilled to be on the executive team of a longstanding leader in multifamily real estate and look forward to putting my industry knowledge of best practices to work. Our goal is to make Madrona Ridge Residential a premier national property management firm," said Gail Duke, Managing Director. "Delivering excellent property management services will allow us to improve resident satisfaction and further enhance the value of our assets. After ensuring the smooth transition of Security Properties' assets to management by Madrona Ridge Residential, we may consider providing third-party management services."
About Madrona Ridge Residential
Madrona Ridge Residential is a national property management firm committed to delivering exceptional service to apartment communities and their residents. The company provides property, construction and compliance management services that create positive living environments for residents and build value for clients. Based in Seattle, Washington, Madrona Ridge Residential is an affiliate of Security Properties Inc., a national real estate investment and operating firm with a 41-year performance record in multifamily housing. For more information, visit www.madronaridgellc.com.
About Security Properties
Security Properties is a national real estate investment and operating company headquartered in Seattle, Washington with a 41-year history in both affordable and conventional multifamily rental housing. The company's broad range of capabilities includes acquisitions, development, financing, asset and property management, dispositions and advisory services. As one of the largest owners of multifamily real estate in the country and in the Puget Sound region, Security Properties has acquired or developed nearly 64,000 conventional and affordable housing units spanning over 440 properties in more than 40 states. For more information, visit www.securityproperties.com.
Law School Signs Lease with Entrada Apartments
SAN DIEGO-Multifamily owner Security Properties Inc. has signed a 15-year master lease agreement with the Thomas Jefferson School of Law for the Entrada Apartments property in downtown San Diego. Acquired by Security Properties for $22 million at a 6.25% cap rate in July 2010, the 172-unit Entrada Apartments complex will provide convenient housing for the law school's growing student body.
Security Properties tells GlobeSt.com that it is not disclosing terms of the lease agreement. Located in San Diego's East Village neighborhood one block from the law school's new downtown campus, Entrada Apartments is in close proximity to nearby shopping, dining and recreation as well as a block from the light rail line.
"Our long-term lease with the Thomas Jefferson School of Law represents a win-win for all parties," says John M. Orehek, president and CEO of Security Properties. "Not only does Entrada Apartments support the law school's ability to attract and grow its student body, but it also provides tenant stability and predictable cash flow for the project's ownership and investors."
Formerly located in San Diego's Old Town area, Thomas Jefferson Law School recently completed its relocation downtown with a new facility that opened in January 2011. With a current enrollment of 950 students and 200 faculty/staff, the law school plans to expand its student body to more than 1,000 students at its new downtown campus in the coming year. As the school's first designated student housing building, Entrada Apartments will be occupied by students starting in the spring 2011 term.
"We are thrilled to have been able to partner with Security Properties to provide such a high-quality housing option for our students engaged in heavy law studies," says M. Elizabeth Kransberger, associate dean for Student Affairs at the Thomas Jefferson School of Law. "The situation is ideal and substantially enhances both our ability to recruit the highest quality student body to Thomas Jefferson School of Law, and to provide a greater economic benefit to the East Village community which has been so welcoming to us."
Kransberger points out that the law school plans to charge market-rate rents for the apartments and in some instances will offer need and merit-based housing grants to its students. Roughly 90% of the building's units are studios, with rents for the studios ranging from $900-$1,200.
In addition, the law school is offering its students units in the building as they naturally free up and become available, so "it will be an organic transition and they will not be evicting any current residents who live at Entrada," according to the law school. The school already had 26 students living at Entrada prior to the lease signing since it's one of many downtown buildings where students reside, and currently they have a total of 48 law school students living at Entrada. They have established a waitlist process for students, which is used as vacancies arise in the building.
Built in 2004, the 159,000-square-foot Entrada Apartments building includes a mix of studio, loft, one-bedroom, two-bedroom and three-bedroom apartments. The building features a newly renovated rooftop common area, interior courtyard, fitness center and underground parking. The apartment complex occupies a central location in the heart of downtown San Diego, which is being revitalized into a mixed-use, transit-oriented urban area.
La Jolla Capital Partners broker Steve Chiles represented the Thomas Jefferson School of Law and Security Properties represented itself in the Entrada Apartments lease transaction. La Jolla Capital Partners also represented the law school in the land acquisition and assisted with financing the new $90 million law school facility.
Seattle-based Security Properties owns more than 17,000 apartments nationwide and has been in business for more than 40 years. That doesn't mean 2011 won't be a groundbreaking year for the firm, both literally and figuratively, especially under the direction of CEO John Orehek.
In fact, it didn't take long for the company to make a big announcement. In early January, Security said it was re-entering property management-a business it exited in 1993-by forming Madrona Ridge Residential as its newly affiliated property management firm. The reason for the launch? Security wants to position itself to manage units that are wholly owned, partially owned, or part of general managed partnerships. Security hopes it will provide its asset management group with a more intimate understanding of how their communities are performing.
If Orehek has his way, though, Security will have a lot more units to potentially manage by the end of 2011. That's because after sitting out last year and only buying the Entrada Apartments, a 172-unit complex located in downtown San Diego, for $22 million, he's ready to jump into the acquisition fracas this year.
"Our attitude is to be very aggressive this year," Orehek says. "Last year, we were a little more selective and cautious about where the market was going. This year, with some stabilization in fundamentals and pricing, I'm ready to be a little more aggressive in my appetite to acquire, as long as the asset is in the right location with the right fundamentals."
Though Orehek acknowledges an extreme competition for apartments, he feels that properties are still renting at rates lower than at the height of the market, and in many regions, he thinks the firm can still make buys below replacement costs. Instead of the trophy properties that traded last year, he expects to see more Bs and Cs to come loose in 2010. That presents opportunities for the company, which has acquired, operated, and sold 27 properties comprising nearly 5,500 units over the past decade, all in the A or B asset group.
Security also has a development platform that has produced 835 multifamily units over the past decade. So there's also the potential to start properties in the pipeline, in addition to pursuing tax credits deals.
"These [development] deals are beginning to see potential revenue streams where we believe we can get them financed within the next 12 months," Orehek says. "We have a number of properties in Seattle and Portland, which I would think we'll be getting ready to begin construction on in the next 12 months."
Firm expands with Reserve at Thornton
by Jennifer Hayes
A Seattle-based company that pinpointed Denver as one of its target markets expanded its local portfolio with the purchase of The Reserve at Thornton.
Security Properties Inc., which plans to actively acquire apartment communities in Denver over the next two to three years, acquired the general partner position and a majority of the economic interests in the ownership of The Reserve at Thornton from Trammell Crow Residential
The 276-unit Class A property is the fourth acquisition by the firm in Colorado since its re-entry into the Denver market in 2008 and the second in the past year.
"We're optimistic and excited about the opportunities in Denver. We look to substantially increase our portfolio there," said Tim Overland, managing director of the firm's Affordable Housing Group, who noted the metro area's continued job growth and shortage in the supply pipeline make for an attractive market. "We like the asset, we love the market."
"We're pleased to further expand our portfolio in the Denver market with this latest acquisition of The Reserve at Thornton property," added John M. Orehek, president and chief executive officer of Security Properties.
"Our extensive expertise as an affordable housing operator, knowledge of the unique regulatory and compliance issues governing this sector and strong balance sheet will help us deliver value to our investors and partners with this asset."
Constructed in 2006 by an affiliate of Trammell Crow Residential, The Reserve at Thornton is partly financed under the federal low-income housing tax credit program.
The 10-building community at 9700 Welby Road comprises entirely affordable apartments for individuals earning between 40 percent and 55 percent of area median income, and represents the only Class A rental property in the area exclusively serving the low-income renter segment, according to Security Properties.
Typically, when Security Properties acquires affordable apartment communities, it immediately addresses deferred maintenance issues and performs renovations to bring the property up to a high-quality condition, however, due to the state of the Thornton property, little work is needed.
"The community has terrific visibility, beautiful buildings and the quality of construction is very high. The Reserve at Thornton is in good shape and, in this case, very, very little work needs to be done," said Overland.
The Reserve at Thornton is 97 percent occupied with no concessions and has a very low turnover rate, added Overland. Amenities at The Reserve at Thornton include a swimming pool, fitness center, business center, playground and "spacious" layouts among its one-, two- and three-bedroom floorplans. "The unit mix is very functional, well designed and well laid out," said Overland. As well, the parking, which is configured on the outside of the buildings, adds to the community feel of The Reserve at Thornton.
No brokers were involved in the transaction. Centerline, the limited partner, remains part of the partnership. The price of the transaction was not disclosed.
Last May, Security Properties acquired the Diamond at Prospect LIHTC property in Denver's central business district. The firm also owns the Axis at Nine Mile Station and Marcella Manor communities for a total of 958 affordable and conventional apartments in the Denver area.
Security Properties looks to acquire additional communities, affordable and conventional, over the next several years along the Front Range and has looked as far north as Fort Collins and as far south as Castle Rock for opportunities.
The 41-year-old firm, one of the nation's largest owners of multifamily assets, specializes in acquisitions, development, financing, asset and property management, dispositions and advisory services. Security Properties has acquired or developed nearly 64,000 apartments in 440 properties in more than 40 states, including 113 affordable housing assets of more than 12,000 units.
Fundamentals are driving apartment construction
By John Orehek, Guest Columnist
As the commercial real estate industry continues to shift its focus toward apartments, it's no surprise that more players are jumping back into the development game and choosing to deploy capital into ground-up construction.
What's driving this renewed optimism, after new construction in virtually every sector ground to a halt amid the recession?
In many respects, it comes down to fundamentals. Owner/operators are able to attract capital for new construction when rental rates justify a targeted return on total development costs. Currently, for certain apartment projects in certain submarkets, the projected returns on new construction investments are better than the yields on existing asset purchases.
In short, demand is up and construction costs have retreated from pre-recession highs, thus driving new construction.
Demographic trends continue to favor longer-term demand for rental housing, particularly in urban infill locations near employment centers with population and job growth to support absorption. The prime 20-to-34 rental age group is entering a period of substantial growth due to the wave of echo boomers, representing a sizable source of demand for apartments.
The Urban Land Institute reports that the Seattle area has seen an influx of 160,000 new residents since the recession, and state demographers expect that migration to Washington will nearly double from recession lows by 2012.
While job creation has been the missing ingredient in economic recovery, that picture is starting to look brighter. According to the Labor Department, the private sector added more than 220,000 jobs last month - a turning point that finally pushed the national unemployment rate below 9 percent for the first time in nearly two years.
Here in Washington, about 27,000 new employees joined the work force between November 2009 and November 2010. As businesses signal that they are finally willing to resume widespread hiring across a broad range of sectors, stronger job growth will inspire further confidence in sustained renter demand.
The most attractive regions for new apartment development are markets with high cost-of-homeownership barriers, which further widen the price gap between owning and renting.
According to Moody's Analytics, Seattle's rent ratio of 27.3 - the purchase price of a typical home divided by the annual rent of a similar home - places it among the top five highest rent ratios compared to more than 55 metro areas in the country. As a general rule of thumb, a ratio above 20 makes a better case for renting.
And not surprisingly, many people of all ages no longer equate homeownership with financial security and increasingly favor renting for lifestyle reasons.
The combination of rising demand with unprecedented low levels of supply is pushing apartment occupancies and rents high enough to make some development opportunities attractive. According to the Census Bureau, new apartment construction fell to a 50-year low in 2009.
Based on data from Dupre + Scott apartment market research firm, only 2,000 new units will enter the Seattle area market this year - a 40-year low in production levels - and there are only 3,000 in the pipeline for 2012.
Construction costs are down significantly from peak pre-recession pricing. With rental income being driven up by demand and with lower construction costs, investment yields can favor development.
As the jobs picture strengthens and demographic trends continue to favor rentals, we can expect the apartment sector's fundamentals to further improve this year and contribute to compelling apartment development opportunities in the Seattle market.
Chelsea Heights sold for $15 million
One of Tacoma developer Prium's signature properties now belongs to a Seattle-based real estate company and its equity partner, who bought it for a cool $15 million in an off-market deal.
Security Properties announced Monday the acquisition of Chelsea Heights, an apartment/retail building on the corner of Sixth Avenue and South J Street. It's a 78-unit condo-turned-apartment complex atop 19,000-square-feet of commercial space that is leased to MultiCare Health System.
David Dufenhorst, chief investment officer for Security Properties, said in an interview that the building's location and lease with MultiCare - a 10-year lease with two 10-year options - were key. And since the building was conceived as condominiums, the quality of design was higher than an average multi-family building.
"We got good quality for a good price," he said.
Dufenhorst said a confidentiality agreement prevented him from identifying the seller, but he said his company had been trying to obtain Chelsea Heights for months.
Pierce County records indicate the last owner of Chelsea Heights is Sterling Savings Bank, a subsidiary of which began foreclosure on the building owner last year. A Prium-controlled limited liability company owed the subsidiary, Intervest Mortgage Investment Co., more than $21 million on the building, other records show. The LLC filed for bankruptcy last year. The bankruptcy was dismissed in December when the debtor essentially let the property go.
Chelsea Heights is one of several Prium properties that have run into trouble. In January, a Thurston County judge ordered 10 office buildings in Lacey, Olympia, Shelton and Port Angeles to be run by a receiver after they fell into default. A Prium property in Spokane also is in receivership, and records for the U.S. Bankruptcy Court of Western Washington show several other projects in some form of reorganization. Finally, the principals of Prium, Tom Price and Hyun Um, have filed personal bankruptcies.
Um did not return a message Monday seeking comment.
Dufenhorst said Security Properties partnered with New York-based Real Estate Capital Partners, an investment advisory firm. Security Properties has a 20 percent ownership stake, he said, and its management arm will run the apartments.
The second floor, with about 28 units, was recently completed and soon will be available to lease, Dufenhorst said. His company plans to furnish and staff the leasing office, as well as build a gym for tenants.
Security Partners has more than 440 properties nationwide, including 11 in Washington. At 78 units, Chelsea Heights is its smallest property in the state. Dufenhorst said the size wasn't as important as the price.
"Apartments are in hot demand, and it's really hard to find things off-market," he said. "They're usually listed by a broker with lots of bidders.
"We're willing to go a little smaller to avoid getting into a bidding war," Dufenhorst said.
Tacoma is an attractive multi-family real estate market, he said, citing the port, Joint Base Lewis-McChord and MultiCare as positive indicators.
"We'd like to buy more in Tacoma, Dufenhorst said. "There's good quality, affordable housing there and we want to be a part of it."
Under Wraps: In select markets, Security Properties is turning around off-market and distressed acquisitions via master leasing.
Talk about an anxious first quarter of the year for Seattle-based Security Properties. In December, the multifamily apartment investor and owner/ operator of 17,000 units across 30 states was on the cusp of closing the note purchase on Chelsea Heights, a mixed-use, 78-unit condo reversion with 19,266 square feet of leased ground-floor office space in downtown Tacoma, Wash. Then, things got ugly. The borrower began fighting with the bank and filed for bankruptcy; the bank was attempting to foreclose on the property; and the guarantors of the loan sued the bank.
"It wasn't a friendly foreclosure, by any means," says Security Properties chief investment officer David Dufenhorst. "Our challenge during the whole process was convincing the bank to continue to work with us on an off-market basis and not list the property."
In the last week of January, Chelsea Heights finally cleared foreclosure, and after eight weeks of construction completion to 28 units on the second floor, the bank (which Security cannot name per confidentiality agreements) sold the asset to Security in a $15 million, fee-simple deal announced April 4. Security now turns to lease-up at the property-which was 54 percent occupied as the firm took over operations-and has dispatched a leasing specialist team down to Tacoma to power up absorption.
That team's job could be completed quickly if Security can negotiate a master lease with Multi Care, one of the largest employers in Tacoma and current holder of a 10-year lease (plus two additional 10-year lease options) of the ground-floor office space at Chelsea Heights. Although requiring some additional negotiating beyond the leasing office, the strategy has already paid off for Security, which acquired the Entrada Apartments in San Diego for $22 million in July 2010 and master-leased the entire complex to the Thomas Jefferson School of Law just six months later.
The Tacoma market, with MultiCare and Army/Air Force facility Joint Base Lewis- McChord, offers good job-growth (and, consequently, rent-growth) prospects, regardless of whether a master lease is executed at Chelsea Heights. Similarly, Security continues to look for acquisition opportunities in Western markets with solid in-migration and/or employment-growth prospects and is also seeking institutional equity interested in partnering up with the company on its deals. At Chelsea Heights, Security went 20 percent in alongside New York City-based Real Estate Capital Partners.
"This was our first deal with Real Estate Capital Partners, which was a really great group," Dufenhorst says. "We like to partner, and a lot of traditional institutional investors have been on the sidelines, so we're out fostering new relationships."
Security intends to keep fostering new leasing relationships as well, particularly with partners that can go all-in themselves on a master deal. Until then, the firm will continue searching for those off-market opportunities and try to keep them off-market too. "Surprisingly, there's still not a lot of product available, and it's still hard to find deals that will pencil out," Dufenhorst says.
Village Greener - Atrium Village to get four towers and a two acre park.
When it opened in 1977, Atrium Village became a model for community-developed, mixed-income housing nationwide. It has remained such a success that many of its original residents still call it home. Straddling Chicago's notorious Cabrini Green housing projects, Old Town and the tony Gold Coast beyond, Atrium Village served as a transitional zone between two very different worlds. With Cabrini Green demolished, the development's owners, which include four area churches, are looking to vastly expand Atrium Village by adding retail and open space, all while staying true to its social mission.
Working with Chicago-based FitzGerald Associates Architects and Seattle-based Bumgardner, the owners are planning an enlarged Atrium Village, with four high rise towers, a series of townhouses, and two acres set aside for open space. In its current state, Atrium village consists of an eight-story building surrounded by low-rise apartments. In accordance with the thinking of the time, the project was built "defensively," according to Michael DeRouin, president of FitzGerald, with surface parking lots placed at the corners and a perimeter fence encircling the property. More than a quarter of the seven-acre site is given over to parking lots.
Pending approval from community groups, Alderman Walter Burnett, and the Chicago Plan Commission, the new Atrium Village will have all underground parking, as well as approximately 40,000 square feet of retail space, including one large retail space to be leased to a local grocery store. The four towers, stepping up from 28, 36, and 41 to finally 44 stories, will anchor the corners of the site. A two-acre park, designed by Hitchcock Design Group, will be open to the public and accessible mid-block through an entrance on Wells Street. The tower podiums will feature green roofs and roof gardens, including one devoted to rooftop farming. The entire project will include over 1,600 units, 320 of which will be affordable housing, a slight increase in the current ratio at Atrium Village.
The project has met with enthusiastic reviews from residents. "We got a standing ovation when we said that every unit would have a washer/dryer," DeRouin said. The careful phasing, which is designed to displace as few residents as possible, as well as the long-term tenant-landlord relationship, also played a major role in winning over residents. "There's a lot of trust there," he said. The plan calls for the demolition of approximately 48 units at the corner of Division and Wells streets, with relocated residents having the option to return. A 300-unit tower would rise in its place to house residents while the next portion is cleared for the following phase, a process that would be repeated over four phases. The entire build-out is expected to take ten to 15 years.
The development team and the architects recently held an initial meeting with the Old Town Chamber of Commerce. They aim to meet with the broader community soon, DeRouin said. The development team hopes the community will see the enlarged project as a better use of the near-downtown parcel. And, he added, "No one really believes there should be large surface parking lots so close to downtown Chicago."
Security Properties Wins ULI Jack Kemp Workforce Housing "Models of Excellence" Award
Reuters - Security Properties Inc., one of the largest multifamily real estate owners in the country, today announced it has received the Urban Land Institute (ULI) Terwilliger Center's highest honor in workforce housing, one of four 2011 Jack Kemp Workforce Housing Models of Excellence awards.
The award was presented to Security Properties by former HUD Secretary Steven C. Preston at a gala held September 21 in Washington, D.C. The Awards, in memory of Jack Kemp, the late HUD Secretary and member of U.S. Congress, are a part of the Center's ongoing efforts to position workforce housing as a critical component of vibrant communities.
"These success stories show innovation and purpose on many levels. They are making a positive contribution to their communities, and they are providing important roadmaps for other communities in need of workforce housing," said Secretary Preston, now president and chief executive officer of OAKLEAF Waste Management in East Hartford, Conn.
On the Park was recognized as an outstanding achievement in several areas including innovative financing, unique construction methodologies, strong public/private partnerships, and replicability to achieve workforce housing affordability. The four winning developments for 2011 were chosen from 30 submissions located throughout the United States. The other three award-winning projects are located in New York and Massachusetts.
"We're thrilled by this recognition of our efforts to bring more workforce housing to a marketplace that so badly needs it," said John M. Orehek, President and CEO of Security Properties. "We're grateful and humbled to be in such company with our fellow award winners, and to be recognized by an award named in honor of someone who did so much to advance equitable housing goals for this country."
On the Park is a mixed-use, mixed-income development located in Seattle's vibrant Ballard neighborhood. Once occupied by an aging grocery store and parking lot, the 1.5-acre development site now holds 268 apartments with a new 45,000-square-foot grocery store on the ground floor, all-underground parking and a small cafe. It offers 54 apartments affordable to individuals and families with incomes at or below 80 to 90 percent of AMI, with basic utilities included. Security Properties partnered with the AFL-CIO Building Investment Trust for the development and ownership of On the Park. The $90 million project was funded entirely with equity. Security Properties also partnered with the city of Seattle to meet the workforce housing goals of the project and make it financially feasible.
Security Properties Buys $34M Portland Apartments
BEAVERTON, Ore. - Security Properties acquired three Portland suburban apartment properties for $34.3 million.
The deal's blended cap rate was 5.5 percent, said HFO Investment Real Estate partner Greg Frick.
HFO of Portland and Dave Schumacher and David Mortensen of the Seattle office of Colliers International marketed the properties for seller Belkorp Holdings, a Canadian investor. They also represented Seattle-based Security, whose equity partner on the deal is Praedium.
Located in Beaverton near employers Nike and Intel, the properties were built in the 1980s and are between 97 and 100 percent occupied. The 119-unit Willow Grove sold for $12.6 million. The 100-unit Richmond Park sold for $12.1 million. The 83-unit Richland Terrace sold for $9.6 million.
Mortensen said Security will upgrade the interiors to derive higher rents.
Designs Take Shape at $600M Atrium Project
CHICAGO-The group that owns the current 7-acre Atrium Village has proposed a $600 million redevelopment plan to city officials. The new plan would replace the current nine-story apartment building and adjoining six-unit townhomes with about 1,673 units in four high-rises and townhomes.
The property, built in 1977, adjoins the former Cabrini Green site, the infamous collection of affordable housing towers that turned into gang dens more used for drug sales than families. However, with the tear-down of Cabrini Green, the neighborhood here has started to change more affluent.
That's not to say all the units will be market rate. The developers include four churches - LaSalle Street, Holy Family Lutheran, St. Matthew United Methodist and Fourth Presbyterian - which want to continue the property's current affordable housing mix. The site will offer about 20% of the units for affordable housing, though it's reported that the market rate unit rents will go up drastically from what they are now, up to about $1,900 per month.
The buildings will be constructed in phases, with a 24-story tower planned for the first phase, at the southwest corner of Wells and Division. A spokeswoman for the development team, which also includes Crane Construction Co. Inc. and Security Properties Inc., tells GlobeSt.com that each tower of up to 40 stories will likely cost about $150 million to build.
The rest of the site will include a 20,000-square-foot retail grocery anchor and smaller retail units, as well as underground parking, a Bright Horizons School and a 2-acre park. The spokeswoman says if the city approves all the zoning and modifications, construction of the first phase will start in June 2013. The entire project with all the buildings will take up to 15 years to finish, she says.
Jeffrey Crane with Crane said in a statement that the current buildings are just too old and outmoded to continue renting. "Our plan not only right-sizes the development to
fit in with the neighborhood, but we have the opportunity to both use the superior materials and energy systems of today in addition to adding the amenities that today's renters look for and demand, such as wifi, washers and dryers in the apartment, dishwashers, work out rooms, media rooms, business centers and the like," he said.
The design team for the project includes locally-based FitzGerald Associates and Architects of Chicago, Seattle-based Baumgardner Architects and Naperville, IL-based Hitchcock Design Group. The site's design ideas were reportedly modeled after the $2 -billion Lakeshore East apartment complex downtown.
Security Properties Begins Planning for the Redevelopment of a Mixed-Use Urban Renewal Project in Downtown Chicago
SEATTLE, Nov 14, 2011 (BUSINESS WIRE) -- Security Properties Inc. announced it has introduced a master plan to the Chicago City Council for redevelopment of a seven plus acre transit-oriented, mixed-use site just north of downtown Chicago's central business district.
Built in 1977 by Security Properties Inc. and Crane Construction Company Inc., and in partnership with a consortium of four Chicago churches, Atrium Village currently includes more than 300 low-density affordable and market-rate apartments and several surface parking lots.
When complete, the new Atrium Village project will be anchored by four residential towers, ranging between 300-440 feet in height. Staying true to the original project's mission, 20 percent of the 1,500 new apartments in the development will be income restricted, providing much needed workforce housing close to transit and employment centers.
In addition, the project will feature more than 55,000 square feet of new ground-level retail space and structured parking for 1,300 vehicles.
"Our vision is that over the next decade, the existing low rise, low density, gated community will be rebuilt to be a LEED-certified, transit-oriented, mixed-income, mixed-use development -- one that reflects the changes in the neighborhood, the city and best housing practices that have evolved over the past four decades," said John Marasco, chief development officer at Security Properties Inc.
At the center of the new development will be a public, two-acre terraced park, complete with water features, sitting areas, walking paths, a ring of townhomes at its perimeter and a free-standing low-scale building designed for a restaurant.
Two major Chicago Transit Authority transit lines run in close proximity to the property. The Brown line runs adjacent to the property where a new station is being planned which will be incorporated with one of the new Atrium Village towers. The CTA's Red Line is within two blocks of the development, offering residents and retailers car-free access within minutes of downtown Chicago and providing connections beyond the city's northern suburbs.
"When Atrium Village was first built we were just about the only residential entity around," said Chuck Infelt, Pastor Emeritus, Holy Family Lutheran Church, one of the four partner churches. "Today, we are surrounded by numerous residential developments filled with old and young people who are attracted to the vitality of the area. Just as we wanted to serve the community in the 1970s when planning began, we want to meet the needs of our community today."
Jeffrey D. Crane of Crane Construction Company Inc. explained that as it is often the case, necessity became the mother of invention. "Approximately five years ago we became painfully aware of the need for change. The property is aging and really not configured to the needs of today's individuals or families. It was both a challenge and an opportunity," said Crane. "Our plan not only right-sizes the development to fit in with the neighborhood. It also creates the opportunity to both use the superior materials and energy systems of today in addition to adding the amenities that today's renters look for and demand -- Wi-Fi, washers and dryers in the apartment, dishwashers, workout rooms, media rooms, business centers and the like."
Marasco added that the residents' reaction to the proposed redevelopment was rewarding. "This has always been a tight-knit community with a common purpose and interest with the ownership. We were delighted that the residents are excited about the change and are eager to have an opportunity to become residents of the new buildings. Our goal is not only to revitalize Atrium Village but ensure that it remains a model for the nation -- of what great urban housing developments can be."
Commercial Real Estate: Suburbs' new ways
By John Orehek and Greg Johnson, Guest Columnists
Suburban markets are creating surprising dialogues around land use and transit these days.
Recent successful projects that combine compact mixed-use development, open space, carbon-reduction measures, transit (bus or rail), affordability and sustainability have been realized in Mill Creek, Bothell, Kent, Puyallup and beyond.
Demographics, demand, market forces and, of course, rents, jobs and taxes all seem to indicate that the Puget Sound region can expect to see more of these developments.
Add 2030 and 2040 growth targets and this trend could be a “new normal” for our region.
The trend toward these developments began with the blurring of urban and suburban lines. Demographics started the shift early on, driven by boomers, empty nesters, and Gen X and Y, who created demand for walkable, flexible central business districts in markets they could afford.
The trend strengthened with an appetite by younger generations for “20-minute living.” This meant they wanted shorter daily trips by car, access to transit, and options for foot and bike commuting.
Urban areas were heralded for micro-neighborhoods that feel like small towns within big cities, with nodes of service and economic opportunity close at hand. Residents and workers stay close and often go carless, or walk or ride. But challenges remain. The cost of living in these areas was high.
Still, as a result of this market demand, emerging suburban markets saw opportunity, and began successfully developing lower-cost urban models for suburban demographics. In King County, demographic trends show that by 2015 the income and age range of those flocking to urban areas will not be that much different from those aiming at suburban areas.
These successes didn’t happen in a vacuum, and they had their challenges. Public and private partnerships have proven to be imperative to success in these areas, with Kent and Bothell serving as two examples.
In the case of Bothell, the city is undertaking a partnership with a Portland hotel and retail chain to turn a historic Bothell school into a boutique hotel, retail center and entertainment complex. The city is also pursuing a partnership for a new city hall and city center that will include a plaza for community events and mixed-use buildings — all combining to create a revitalized Bothell.
Clearly, a new model has emerged.
Earlier this year, the Urban Land Institute issued a report saying that suburban development models that will not incorporate transit were “over.” Areas that were built without these transit options were described as “islands,” isolating their residents and therefore sacrificing their market appeal.
Transit options, including bus, bus rapid transit, streetcars, light rail and bicycles must be a part of the mix. Without these ingredients, it is nearly impossible to create the desired next-generation model of urban and suburban living.
The city of Bellevue took another bold step in this direction on Nov. 15 as the City Council voted unanimously to approve its East Link partnership agreement with Sound Transit, ensuring it will be possible to travel by train from Seattle through Mercer Island, Bellevue and Redmond, or vice versa.
Still, many new opportunities remain. Market forces and demographics are the larger influences of demand. The demand is present, and the market is waiting for these innovations.
And so is the environmental need. One of the most salient ways our region can reduce its carbon emissions and meet its reduction goals is through a purposeful focus on compact development and reduction of vehicle miles traveled. Adding density and transit in suburban areas will help our region do just this.
Not all jobs, after all, are in downtown Seattle. At the same time, such developments expand the quality of life, pushing that concept out beyond urban Seattle’s borders and into smaller markets with lower annual median incomes.
There is, in effect, something for everyone to embrace in this new paradigm.
Security Properties Acquires Interest in Four Assets
Multi-housing News - Tacoma, Wash. / Beaverton, Ore.—Security Properties Inc. has announced that its sponsored fund, Security Properties Multifamily Fund, has acquired interests in four properties totaling 380 units. The fund will continue to invest in additional properties over the next two to three years, creating a portfolio that should eventually total between 1,500 and 2,000 units.
“It’s no secret that multifamily investments are the subject of much attention by investors and the media,” says Ed McGovern, managing director of capital markets for Security Properties. “There are strong arguments from a supply and demand perspective, which are backed up by solid demographics, indicating that the trend toward renting should continue in the coming years.”
The acquired properties include the mixed-use Chelsea Heights in Tacoma, Wash., and a portfolio of three assts in Beaverton, Ore. Chelsea Heights is a 78-unit condo to apartment conversion that sits atop 19,000 square feet of commercial space. In Beaverton, Security Properties partnered with The Praedium Group to acquire a 302-unit portfolio comprised of Richmond Park, Richland Terrace and Willow Grove. The mid- to late-1980s vintage properties are likely candidates for an upgrade.
UW, Seattle Children's hospital plan to build employee housing
Two big Seattle employers are partnering with a developer to build something this region probably hasn't seen since the days of the "company town" a century or more ago: housing for their workers.
Seattle Children's hospital and the University of Washington have proposed a 184-unit apartment complex in the University District at which their employees would have priority.
The university is providing the land, the hospital some of the financing. Seattle-based Security Properties would build, own and operate the complex, on 11th Avenue Northeast between Northeast 45th and 47th streets.
Children's and UW officials say it would offer relatively affordable homes close to work for employees ranging from cooks to lab technicians to junior faculty.
First-year medical residents are another target, said Todd Johnson, Children's vice president for facilities: "They're not that well-paid. But they need to be nearby, and sometimes finding housing can be a real problem for them."
The complex also could help both institutions recruit staff from across the country in the face of Seattle's still relatively expensive housing, said Aaron Hoard, the UW's deputy director of regional relations.
Entry-level employees at Children's commute from as far away as Marysville and Federal Way, Johnson says, because that's where they can afford to live.
Employer-provided housing is a big part of the Northwest's history. Pope & Talbot built Port Gamble for workers at its sawmill there. Newcastle began as a coal-mine company town. Asarco's corporate ancestors developed the town of Ruston around their Tacoma smelter.
But those communities all date to the early 1900s, or earlier. It's apparently been many decades since any local employer played a role in supplying housing for workers, historians at Historylink.org say.
Some institutional employers in other high-priced parts of the country - Stanford University in Palo Alto, Calif., is one - already provide staff housing. For Seattle, however, "we think we're the first," Children's Johnson said.
Curve, as the project is called, is a response to both a perceived need and a contractual obligation.
When the Seattle City Council approved Children's plan to expand its Laurelhurst campus in early 2010 after a drawn-out fight with unhappy neighbors, the hospital was required to replace the housing that would be torn down - a 136-unit, postwar condo complex called Laurelon Terrace, on Sand Point Way Northeast.
The council gave Children's a choice: It could pay $10.9 million into a city housing fund, or build replacement housing somewhere in Northeast Seattle.
"We thought that [option] offered a lot more opportunity," Johnson said.
Even before the condition was imposed, he said, Children's and UW executives had been discussing their common need for more-affordable housing near their campuses.
The university happened to have a promising development site: a parking lot covering nearly an acre, acquired in 2006 as part of its purchase of Safeco's U District holdings.
The two institutions solicited proposals from developers this year. Security Properties, which has acquired or developed 440 complexes across the country during its 40-year history, was selected in August.
The company has leased the property from the university for 50 years. Children's is jump-starting the $40 million project's financing with a $6 million, low-interest loan.
That favorable financing is helping Security to set aside 34 of Curve's 184 units for tenants earning no more than 75 percent of the area's median income, or about $51,000 for a two-person household, said John Marasco, the company's chief development officer.
The loan also allows Security to build more large apartments - two- and three-bedroom units - than most developers are building today, he added: "They [Children's and UW] wanted larger units to attract staff with young families."
There's another reason: Laurelon Terrace had 66 two- and three-bedroom units. Children's deal with the city requires that the replacement project contain at least that many.
Preliminary plans call for three buildings of four, six and eight stories, separated by plazas. The building at the corner of 11th and 47th would have ground-floor space for shops or cafes.
Security filed permit applications late last month. Marasco hopes to start construction in early 2013 and finish the complex in late 2014.
It could face plenty of competition. Developers plan to build an additional 640 apartments in the University District by 2015, according to research firm Dupre + Scott Apartment Advisors.
The largest, 284 units, would be across 11th from Curve. Both are near Sound Transit's planned U District light-rail station.
Children's and the university both expect Curve will help get more workers out of their cars. While the complex would be within walking distance of the university, it's nearly two miles from the hospital's main campus.
But there's a good alternative to driving, Johnson said: The hospital already runs a shuttle to Laurelhurst from offices it leases in a U District building a couple blocks away.
Apartments at Curve would be offered to UW and Children's workers before they are marketed to the public. Marasco said he expects employees of the two institutions will make up a good share of the residents: Worker surveys by the two employers found much interest in living closer to work, and that influenced Curve's design.
What's more, Marasco said, Security's Epicenter complex in Fremont, two miles farther from the UW campus, already attracts university employees and students.
"So we know they're out there," he said.
Management Does Make a Difference
Madrona Ridge Residential delivered outstanding results to its clients in its first year. Accomplishments:
- 20 Properties and 3,217 units under management
- Our current markets include Seattle, Portland, Denver and Los Angeles. We will soon be in Phoenix and Orange County.
- Driving Rent Growth
- Exceeded Seattle REIS 2011 Effective Market Rent Growth by 65%
- Leading Puget Sound Region Submarkets in Rent PSF
- Ballard - 11.4% Rent Growth
- Fremont - 12.8% Annualized NOI Growth
- Property Management Services for Select Third Party Clients
- Acquisition Services Including File Audits and Unit Walks
- Market Opinions Fully-Staffed Affordable Housing Compliance Team
- HUD and LIHTC Experts
On the Park wins New Development of the Year
The Washington Multifamily Housing Association hosted the Emerald Awards Gala on the evening of January 19, 2012, where they recognized the regional leaders in property management. On the Park, a property developed by Security Properties and managed by Madrona Ridge Residential, won New Development of the Year.
On the Park is a six-story, 268-unit community that features a 47,750 sq. ft. QFC grocery store in the building. Amenities also include a private theatre, demonstration kitchen, fitness center and spa. Located in the vibrant Ballard neighborhood, residents find themselves just steps from Market Street, home to an array of shopping, dining, entertainment options.
Financial Insecurity Drives Millennials to Choose Renting
By Christina Aragon, Contributor: Forbes
As Generation Y enters a difficult job market, many college graduates and young professionals are unwilling to take big financial risks. According to Mintel’s Marketing to College Students report in 2011, 61% of students said their financial situation is a concern. Though Millennials could bear the most risk in investment at their age, a survey by the Investment Company Institute reveals that fewer Gen Y investors are willing to take big financial risks, as compared to Gen X investors or their parents. What does the skepticism of a new generation mean for the rental market? Many will remain renters for longer than previous generations.
With a slower start financially and a cautious attitude, many Millennials will take a longer time to accumulate the wealth needed to buy and maintain a home. Young people are becoming more frugal in an attempt to seek financial security, with aims to pay off debt and increase savings. Moreover, the average student graduating in 2011 bears $22,900 of debt – the highest level ever, and 47% more than ten years ago. Additional economic factors, such as underemployment and graduates earning historically less in entry level jobs, puts homeownership on the back burner.
As Gen X bears the brunt of the housing price slump, younger consumers are less likely to make the financial and emotional investment of homeownership. Notions of buying a home and starting a family have become outdated markers of adulthood for a new generation less likely to commit as a result of economic insecurity.
Despite High Affordability, Renter Nation Reigns
By Diana Olick, CNBC Real Estate Reporter
More Americans are renting homes, and fewer are owning them; it’s not as if this is news to anyone who follows the U.S. housing market, but a new report from the Census Bureau today really put an historical exclamation point on the trend.
The share of U.S. household renting reached a fifteen year high, and home ownership reached a 15-year low. Funny how those numbers travel together.
34.6 percent of households were renters in the first quarter of this year, and that number is climbing, as lack of credit or sufficient down payment keeps Americans young and old from becoming home owners. Rental vacancies are therefore falling, the lowest rate out West, where foreclosures have run the highest during this housing crash. That is also where investors are rushing in to buy foreclosed properties and put them up for rent. Single family homes for rent, in fact, surpassed multi-family units, taking 52 percent of the $3 trillion rental market, according to CoreLogic.
Both rental and homeowner vacancies are down, which is a general positive for the housing market, because empty houses are a blight on communities. “The vacancy rates will only decline if household formation is increasing or units are being destroyed,” notes ISI Group’s Stephen East.
While banks have bulldozed some foreclosed properties here and there, the practice is by no means popular or widespread. That should mean that household formation is increasing, which is generally a product of an improving jobs picture. Younger Americans who have been living together or with their parents may finally be getting into their own homes, more likely into rentals, but at least they’re forming their own households. That is thanks to a small drop in the unemployment rate among 25-34 year olds to its lowest rate in three years. The home ownership rate now stands at 65.4 percent, down a full percentage point from a year ago, and down from just over 69 percent at the peak in 2004.
Since the recession began, growth in overall new households has been about 50 percent short of trend lines, according to analysts at Goldman Sachs. While household formation is rebounding for single or un-related Americans, formation among families is still waning; that may be due to the types of homes they need, i.e. larger, single-family homes. It thus stands to reason that pent-up demand will show itself first in single family rentals in the future and less in multi-family. No wonder investors are flooding the foreclosure market.
Security Properties Buys Iconic Property in Capitol Hill
SEATTLE, Jun 29, 2012 (BUSINESS WIRE) -- Security Properties, a Seattle-based owner, developer and manager of multifamily real estate, recently completed the $20.25 million acquisition for 700 Broadway, an apartment property located in Seattle's Capitol Hill neighborhood. The property includes 59 residential units and 10,673 square feet of well-located retail.
This acquisition is Security Properties' second purchase in the Seattle metropolitan area recently and the seventh acquisition for the Security Properties Multifamily Fund, according to Chief Investment Officer David Dufenhorst.
"We are very excited to be buying in Seattle again," said Dufenhorst. "This market's dynamic economy, demographics and supply constraints make investing in the region compelling."
Security Properties plans to invest approximately $430,000 for improvements to both the interior and exterior of the property.
"We're going to improve the finishes and bring our managerial and operating knowledge to enhance operating performance," Dufenhorst said.
According to Dufenhorst, the investment has two important things going for it: a 10-year mortgage locked in at an historically low rate, and a highly visible location on the very north end of the Capitol Hill retail corridor with excellent transit connections and walkability (700 Broadway received a walkability score of 98 out of 100 by walkscore.com).
"As the most densely populated neighborhood in Seattle, we expect Capitol Hill will be one of Seattle's premier neighborhoods over the next decade and our property will definitely be a focal point given its highly visible location," Dufenhorst said.
The seller of 700 Broadway was a group of local investors that had owned and managed the property since they developed it in 2005. The property was sold to Security Properties in an off-market transaction.
700 Broadway's occupancy rate is high, with an average per-square-foot rent of $1.87. In addition to the planned physical improvements to the location, Security Properties expects to improve operating performance through focused management and the implementation of institutional management practices by its property management affiliate Madrona Ridge Residential. Security Properties acquired the property in a joint venture with an institutional partner. The Security Properties share of the equity was provided by SP Multifamily Fund which has secured capital commitments from company officers and high-net worth individuals.
The company was drawn to 700 Broadway because of the quality construction and its location, which boasts some of the highest rents and lowest vacancy in Seattle. The property is also prominently located at the north end of Broadway, five blocks from the future Capitol Hill Light Rail which, when complete in 2016, will provide light rail access to and from the airport, as well as downtown Seattle and the University of Washington. The property's retail space is especially desirable, given the visibility down the pedestrian-friendly Broadway corridor.
Kyle Hunt of Hendricks and Partners represented the sellers in the transaction.
Security Properties Named One of Washington's Best Workplaces by Puget Sound Business Journal
Seattle, WA - July 11 - Security Properties was named as one of the finalists for Washington's Best Workplaces by the Puget Sound Business Journal. The program was launched in 2007 to identify and recognize best practices in the hiring and retention of great people. This year, after an extensive and rigorous process, which included more than 300 nominees and the completion of surveys by nominee-company employees across the state, workplaces in four different categories have been identified as Washington's best, based on their various employee benefit offerings, leadership culture and work/life balance philosophies. In total, 85 companies have made the grade as finalists.
Since inception, Security Properties has maintained a steadfast focus on multifamily real estate. During that time, it has gradually expanded from its beginnings as an affordable housing syndicator into market-rate acquisition and development activities, as well as utilizing new programs related to affordable housing investment. It has also greatly expanded its capabilities and expertise, evolving from a firm strictly focused on financial and legal structuring, tax expertise and marketing, to developing capabilities in multifamily operations, property and asset management, construction, finance, accounting, and other areas necessary to run a successful and profitable real estate operation. Throughout, Security Properties has maintained a fiduciary relationship with thousands of investors, both private and institutional. As a result of a generational and demographic shift to renting, the firm has experienced significant increases in demand for its apartment properties and is actively renovating, repositioning or developing several properties from the ground up.
“We are extremely pleased to be included on the Puget Sound Business Journal’s list of Washington’s Best Workplaces,” said Tim Overland, COO of Security Properties. “We have great people who are a pleasure to work with and a culture that is challenging, rewarding, and fun. It’s nice that the PSBJ has recognized that.”
“Work force development has never been more important – or more difficult – than it is in today’s global economy,” said Gordon Prouty, publisher of the Business Journal. “We believe the Business Journal has an important role to play in drawing attention to innovations and excellence in the management of our region’s No. 1 resource: its people.”
The finalists will be celebrated at a one-of-a-kind awards event at Safeco Field on Aug. 9. Honorees and the public alike are invited to come cheer for the workplace accomplishments of these companies from 4:30 p.m. to 7:30 p.m. The celebration will include ballpark food and drink, walking the bases, speed pitching, and an awards presentation. The company with the greatest number of employees present will win a suite at a future Seattle Mariners game.
For more information, visit: www.wabestworkplaces.com
Harvard study: 5.1 Million more Americans are Renters
By Jonathan Lansner - Orange County Register
Why are apartments rents on the rise? Well, the nation's rental market is housing's "bright spot," says Harvard researchers, as the number of American tenants grew by 5.1 million in the past decade.
The Joint Center for Housing Studies of Harvard University's annual real estate review wrote:
The bright spot continues to be the rental market, where demand has spiked. Indeed, the number of renters surged by 5.1 million in the 2000s, the largest decade-long increase in the postwar era. In part, this growth reflects disproportionate shares of young, minority, and lower-income households, who are traditionally more likely to rent. But the foreclosure crisis and the aging of the population have also spurred increases in renting among the middle-aged, as well as households that are white, married and have moderate incomes. Moreover, rental markets have yet to benefit fully from the presence of the large echo-boom generation. The recession helped to dampen the rate at which young people begin to live independently, contributing to a decline in the number of households under age 25 - the years when renting is most common. But once the economy recovers and the echo boomers increasingly strike out on their own, rental markets will receive another significant lift.
So what has the boom in renters meant? Data cited by the Harvard number crunchers:
- Rents up: MPF research showed them outpacing inflation in 38 of the 64 markets; All but Las Vegas had some rent increases; and even markets associated with the foreclosure crisis such as Detroit, Cleveland, and Ft. Myers have rents rising faster than inflation.
- Values up: NCREIF shows prices paid for complexes rose 10 percent in year ended in the fourth quarter of 2011 and are up 34.4 percent from the 2009 low.
- Multifamily starts up: Harvard says that building permits sought more than doubled from bottom to a 225,000-unit annual rate in early 2012. Note: 340,000 was annual average in the decade before the real estate bust.
Security Properties Fund Completes Third Closing
IVC Post - Security Properties Inc., one of the largest multifamily real estate owners in the country, today announced that its Multifamily Fund has completed its third closing and acquired two new apartment properties.
The Security Properties Multifamily Fund was launched in June 2011. Security Properties partnered with its investors to create a private equity real estate fund that would provide a diversified alternative to stocks and bonds. The fund was created to make direct investments, either through wholly-owned entities or in joint venture partnership with institutions.
The Security Properties Multifamily Fund has made two recent investments in and around Seattle:
- Newport Crossing, a 192-unit apartment property located in the city of Newcastle, Washington, was purchased for $30.35 million. Newport Crossing was built in 1990 and is situated in a prime town-center location adjacent to efficient transit service.
- 700 Broadway, an iconic apartment property in Seattle’s Capitol Hill neighborhood, was purchased for $20.25 million. The property includes 59 residential units and 10,673 square feet of well-located retail.
“The Seattle purchases reflect our overall strategy of pursuing multifamily real estate investment opportunities in high-growth western markets characterized by sustainable job and population growth, significant barriers to development and high homeownership costs,” said Ed McGovern, Managing Director of Security Properties. “Seattle’s market is typical of what we are after: a dynamic economy, solid demographics and supply constraints that combine to make investing in the region compelling.”
The Security Properties Multifamily Fund will also pursue multifamily real estate investment opportunities in other western U.S. markets, including Portland, coastal Southern California, San Francisco Bay Area, Scottsdale and Denver.
The Evolution of Tenants
By Blythe Lawrence - BISNOW
Security Properties' one-year-old multifamily fund recently closed on two major buys: the 59-unit 700 Broadway on Capitol Hill and Newport Crossing, a 192-unit complex in Newcastle. Price tag: $50.6M for the pair. (And you thought you splurged on your birthday.)
The acquisitions play into Security's strategy of targeted investments in likeable neighborhoods with excellent access to mass transit. As Ed McGovern, managing director for capital markets, puts it, "Sites with superior access to transit, amenities, and employers are paramount, and not all prime sites are in the CBD." We caught up with Ed and Security Properties COO Tim Overland this week to talk tactics. Security is not trying to reinvent the wheel, Ed says, though it does strive to evolve with tenants. For one thing, there's the new hunger for wireless: "Telling them there's no wireless in a building is like telling them there's no plumbing ," he says. (In our opinion, worse.)
This generation of renters also likely rented during the recession, which means they've gotten comfy with the condo-like feel, colloquially called "luxury apartments." A grocery store or coffee shop on the bottom floor of a building is also a plus. (Obviously, this is also the generation that grew up watching Friends. Good luck when the Glee children start renting.)
Incorporating art, like this masterpiece of a gate below at Security's On the Park development in Ballard, is also important to the company, Tim says. And Security is busy flexing its development muscles, planning to break ground on a new project in Columbia City early next year and moving forward with plans to create a 190-unit complex in the U-District in conjunction with Seattle Children's Hospital and the UW. "We think there are opportunities in the U-District," Tim says. "The area has transit and some great amenities. We expect population increases to come from a much broader, more diverse residential base."
Tim and Ed know something about good digs: Security's offices have occupied the 54th floor of 1201 3rd Avenue for the past dozen years, and it's hard to find a better view of the city. Security, which owns 128 properties in 30 states, is shifting its focus to the western part of the US. While some eastern financiers once thought of Seattle as northwest Alaska, "Alaska should be seen as northwest Seattle," Tim tells us. Evolution, indeed.
Security Properties Pays $30M for Newcastle Apartment Complex
By Jeanne Lang Jones - Staff Writer - Puget Sound Business Journal
Seattle-based Security Properties paid Palo Alto, Calif.--based Pacific Urban Residential $30.35 million for the 192-unit Newport Crossing apartment complex in Newcastle.
David Young, Jones Lang LaSalle managing director, and Corey Marx and Seth Heikkila, senior vice presidents, handled the negotiations for the parties.
Built in 1990, the apartment complex is located at 7311 Coal Creek Parkway S.E. and is 95 percent occupied. Approximately 60 percent of the units were renovated in 2008.
“Suburban markets like Newcastle have seen extremely limited supply of new construction, and as the economy improves, we predict rents there to rise fairly dramatically,” Young said in a release.
Formerly known as Pacific Property Co., the California-based seller owns approximately 1,700 apartment units in the Puget Sound area and has been very active selling and buying multifamily properties locally. The company just sold the 248-unit Montebello Kirkland apartments for $51.9 million to Essex Property Trust, also of Palo Alto. Additionally, Pacific Urban has the La Valencia Bellevue complex in Bellevue’s Lake Hills neighborhood on the market, Young said.
Security Properties also has been active, recently paying $20.25 million for the 59-unit 700 Broadway apartment complex on Capitol Hill in Seattle. That property includes 10,673 square feet of retail space.
“The Seattle purchases reflect our overall strategy of pursuing multifamily real estate investment opportunities in high-growth Western markets characterized by sustainable job and population growth,” Security Properties Managing Director Ed McGovern said in a release. The company is looking for rental properties in Portland, San Francisco, Scottsdale, Denver and along the Southern California coast.
Atrium Village Cleared for Construction
By Ian Fullerton - Contributing Reporter - SkylineThe city has signed off on designs for the redevelopment of the Atrium Village, a lofty residential project that proponents hail as a new beacon in the city’s collection of mixed-income dwellings.
On Monday, the Committee on Zoning, Landmarks and Building Standards approved a zoning amendment for the property, located at 300 West Hill St. near the corner of Division and Wells, allowing developers Atrium Village Associates to construct four buildings containing 1,500 rental units, 300 of which will be reserved for affordable housing tenants — nearly double the amount required for new construction by the city.The plan was whittled down from a 1,673-unit project. The development currently houses 307 units — one of which was once occupied by Secretary of State Jesse White — scattered throughout one mid-rise building and several low-rises.The seven-acre site will also contain nearly 32,000 square feet of retail space and a two-acre public park space. The Bright Horizons childcare center, currently on-site, will be relocated at the southern end of the complex, and designs call for 1,280 underground parking spaces.The project, estimated to cost $500 million, is expected to take upwards of 12 years to complete.Built in the mid-1970s, Atrium Village is cited as one of the first — and most successful — attempts at mixing affordable and market-rate housing in the city. With a view of the neighboring Cabrini-Green developments to the west and the tony Gold Coast neighborhood to the east, the complex was home to a racially and economically mixed tenant body that proved to be a more workable resident structure than that seen in the public housing high-rises, while still providing a place for people of lesser financial stability to remain in the increasingly wealthier area.The project was the work of a development group comprised of four area churches — LaSalle Street, Saint Matthew Methodist, Fourth Presbyterian and Holy Family Lutheran, in partnership with Crane Construction of Chicago and Seattle-based Security Properties. The church collective eventually purchased the development, which sits in an area that has since only appreciated in value.
“This same partnership is ready to take the next step, and will redevelop and continue to operate Atrium Village in the future,” said Edward Kus, an attorney for the project. FitzGerald Associates Architects is also part of the team redeveloping the site.Leslie Hunter, a minster at Holy Family, praised the approval of the new Atrium Village, noting that the development’s model has since been replicated in projects overseen by the US Department of Housing and Urban Development.“We seek to be a moral voice for the community, to seek justice for all people, and to foster quality of life for people of diverse backgrounds and income levels,” Hunter said.The Rev. Maxine Washington, also of Holy Family, grew up in Cabrini and eventually moved to Atrium Village when she began her tenure with the Lutheran Church. Her experience at the development gave her first-hand proof of the potential for people of different backgrounds to live together, she said.“I am overjoyed that hopefully I will get the privilege of celebrating a new and expanded Atrium — my diversity dream housing complex,” said Washington.A representative from the Old Town Merchants Association spoke in support of the project.Ald. Walter Burnett (27th), who grew up in the Cabrini area, noted that early iterations of the plan had been modified to satisfy height and density issues voiced by neighbors. Burnett said that the development and its founders are a standing example of an entity that has stayed and invested in the community.“You may say that this is an ambitious plan, but back in the 1970s, Atrium Village was an ambitious plan,” he said.
Summer Investor Party with Ethan Stowell
Security Properties held it's Summer Investor Party at the On The Park property in the Ballard neighborhood of Seattle on July 25th.
In conjunction with SP's Taste of Ballard theme, Chef Ethan Stowell provided a tasting menu along with a fantastic selection of Northwest pairing wines. Ethan Stowell is a renowned local chef and proprietor of Anchovies & Olives, How To Cook A Wolf, Tavolata and Staple & Fancy. Stowell is a four-time James Beard nominee, was named one of the “Best New Chefs in America” by Food & Wine Magazine, as well as being named to the Seattle 100 in 2009 – a listing of 100 Seattle cultural leaders.
The event was a tremendous success and a great opportunity to thank investors for their continued support as well as showcase the On The Park property.
Security Properties Buys Condo Property in Arizona
SEATTLE, Sept. 17, 2012 /PRNewswire via COMTEX/ -- Security Properties Inc., today announced the purchase of the 207-unit Lakeside Village, a condominium rental property in the Chandler, Arizona area. The property, which is situated along a man made community lake in Chandler, is part of a master planned development that includes homes, condominiums and retail. This acquisition is the ninth purchase by Security Properties Multifamily Fund and is the first purchase by the Fund outside the Pacific Northwest.
The purchase price of the property was $16.4 million. The seller is Rose Lakeside Corporation, a Toronto-based firm that had owned the property since 2006. Of the 230 original units, 207, or 90 percent, were owned by the Rose Lakeside Corporation and have been leased as rental properties. Security Properties intends to commence a $1.9 million value-added renovation to improve common areas in conjunction with the Home Owners Association and to substantially renovate interiors for the 207 units it will be acquiring.
As part of the purchase, Security Properties will deploy Madrona Ridge Residential, its integrated property management company, to assume management responsibilities to provide residents with outstanding service.
"The combination of a well-priced, off-market property with good proximity to employers and amenities made this a smart, strategic investment for us," said David Dufenhorst, chief investment officer at Security Properties.
Major employers in the area include the Intel, which recently committed $300 million to develop a research-and-development facility that will require hundreds of highly-skilled workers. Intel is already building a $5.2 billion fabrication plant in Chandler. Other employers include Bank of America and Wells Fargo back office operations. Just minutes away from the property is the Chandler Fashion Square, a 1.3 million SF shopping center with several mainstream brands. Lakeside Village Apartments has access to a community lake that is maintained and offers catch and release fishing - a rarity in the Phoenix metro area. Also within a short walk, residents have access to well-regarded schools, a Sprouts Farmers Market grocer and solid transit options.
The Security Properties Phoenix portfolio has now grown to four properties for a total of 1,030 units located in Scottsdale, Tempe, and now Chandler.
About Security Properties
Security Properties is a national real estate investment and operating company headquartered in Seattle, Washington with a 41-year history in both affordable and conventional multifamily rental housing. The company's broad range of capabilities includes acquisitions, development, financing, asset and property management, dispositions and advisory services. As one of the largest owners of multifamily real estate in the country, Security Properties has acquired or developed nearly 64,000 conventional and affordable housing units spanning over 440 properties in more than 40 states. For more information, visit www.securityproperties.com .
Shea Andersen, The Fearey Group for Security Properties, (206) 343-1543 or firstname.lastname@example.org
SOURCE Security Properties Inc.
Copyright (C) 2012 PR Newswire. All rights reserved
Security Properties Makes Another Buy In Portland
SEATTLE, Sept. 24, 2012 /PRNewswire via COMTEX/ -- Security Properties Inc., today announced the purchase of the 160-unit Forest Creek apartment complex, located in Portland, Ore. The property, which is located in the upscale Portland neighborhood of Forest Heights, is well-positioned for strong rental performance. The combination of outstanding panoramic views and a lack of competition from apartment properties in the area make it an attractive project. The property is 100 percent occupied.
The purchase price was $25.7 million. Security Properties partnered with an undisclosed partner to purchase the property from Forest Creek Holdings, LLC, a group of local owners and developers.
As part of the purchase, Security Properties will deploy Madrona Ridge Residential, its integrated property management company, to assume management responsibilities to provide residents with outstanding service.
"Forest Ridge has everything we like in a multifamily property: Excellent rental performance, a thriving neighborhood and numerous amenities, all of which create a good investment," said David Dufenhorst, chief investment officer at Security Properties. Security Properties portfolio now includes 6 assets in the Portland market for a total of 789 units.
The location of Forest Creek is critical to its success: The complex is situated within Forest Heights, a master planned community with high-end homes and adjacent to biking and hiking trails. The complex is across the street from a quaint neighborhood retail center that includes a Starbucks, a gourmet market and boutique shops. Downtown Portland is just a 10 minute drive away and the neighborhood association provides a free tram to the MAX Light Rail Station with connections to downtown, the Portland International Airport and both the Nike and Intel campuses.
About Security Properties
Security Properties is a national real estate investment and operating company headquartered in Seattle, Washington with a 43-year history in both affordable and conventional multifamily rental housing. The company's broad range of capabilities includes acquisitions, development, financing, asset and property management, dispositions and advisory services. As one of the largest owners of multifamily real estate in the country, Security Properties has acquired or developed nearly 64,000 conventional and affordable housing units spanning over 440 properties in more than 40 states. For more information, visit www.securityproperties.com .
Media Contact: Shea Andersen, The Fearey Group for Security Properties, (206) 343-1543 or email@example.com
SOURCE Security Properties Inc.
Copyright (C) 2012 PR Newswire. All rights reserved
Security Properties Buys West Seattle Units
By Journal Staff - Daily Journal of Commerce
SEATTLE — Security Properties bought the 38-unit College Street apartment complex in West Seattle's Admiral District for $4.8 million.
The Seattle-based developer bought the property from Popkin Development.
Security partnered with Henry Popkin — the developer of College Street — to buy out other partners.
Madrona Ridge Residential, Security Properties' property management company, will manage the complex.
“College Street has many of the attributes we like to see in an urban apartment community,” David Dufenhorst, chief investment officer for Security Properties, said in a press release.
This is Security Properties' seventh purchase in the last 11 months, according to the press release.
Security Properties has acquired or developed property in 40 states.
Security Properties Pays $18M For The Westwater
By Journal Staff - Daily Journal of Commerce
Security Properties said it bought the 62-unit Westwater apartments on First Street in downtown Kirkland for $18 million.
It was built in 2003 and has about 8,000 square feet of retail below five levels of apartments. There is parking under the building.
Security Properties said it plans to do some upgrades to the interior finishes and fixtures, such as lighting and carpets.
The units have open floorplans and gas fireplaces.
Security Properties is based in Seattle and says it is one of the largest owners of multifamily real estate in the country. It has acquired or developed nearly 66,000 housing units in 450 properties.
Multifamily: A Buyer's or Seller's Market?
By Tim Overland - Security Properties
At more than $500,000 per apartment unit, the recent record-setting sale price on the Aspira apartment tower in downtown Seattle speaks volumes about the state of the apartment market. Exactly what is says depends on how you interpret trends in the market.
Multifamily asset pricing, capital markets, demographic trends, and the for-sale housing market will all impact the long-term success of today’s decisions to buy or sell.
Through the third quarter of 2012, King County apartment transaction volume was on track to exceed any level over the last five years, with 64 (20-plus units) apartment sales closed year-to-date with aggregate pricing of approximately $1.2 billion. Many other sales are under contract and expected to close prior to year-end, making 2012 likely to be one of the most active apartment transaction years ever.
The high level of activity suggests that owners and investors are divided on the issue of whether this is a time to load up the portfolio with new acquisitions, or take chips off the table and sell.
Sellers quote that values on certain assets are at all-time highs and cap rates are at historic lows. Newly constructed, well-located properties — particularly appealing to institutional investors — have reached remarkable pricing levels; well in excess of new replacement cost and at cap rates below 4 percent.
Recent sales of Aspira and Circa Greenlake, both purchased by affiliates of TIAA-CREF, illustrate institutional buyers’ willingness to accept very low yields in exchange for quality real estate in premier locations.
Certainly, these sales represent the leading edge of pricing for apartment investments in the metro area, but other assets have traded at very low cap rates relative to long-term averages. In a broader context, these transactions illustrate the current shortage of investment opportunities that generate a compelling risk-adjusted yield.
While cap rates are low relative to historic averages, as buyers are keenly aware, so too are interest rates on available debt. Fannie Mae, Freddie Mac, life insurance companies and other players are lending to multifamily owners on seven or 10-year terms at rates less than 3.5 percent. And full-term loan rates are in the low 4 percent range.
At the end of the last apartment cycle in 2006-07, many multifamily properties were bought with so-called “negative leverage,” where cap rates were less than the borrowing costs. Today, such trades are rare, as rock-bottom interest rates are providing positive leverage on even the lowest cap rate investments. Further, investors gain comfort from longer loan terms and in many cases, interest-only periods on the front end of the loan term.
With such compelling interest rates on debt, today’s buyers are able to acquire fully occupied, performing apartment assets with projected double-digit rates of return with conservative underwriting of income, expenses and exit pricing.
Supply shock anxiety
Owner anxiety about a supply shock in the Seattle area also plays into sale decisions. A recent CBRE study estimated that approximately 18,500 new apartment units will be delivered to the Seattle area over the next three years. The near-term supply — averaging more than 6,000 units per year for the next three years — is roughly twice the long-term average for the Seattle market.
Though market occupancy rates are still stable at around 94 percent, some market observers expect some softening of rents with this new supply.
While near-term supply in the Seattle market remains an open question, buyers regularly cite favorable demographic trends as support for apartment rental demand for the longer term. A large percentage of the typical renter population is between 18 and 35 years old, which happens to line up with the Echo Boom. The U.S. Census Bureau projects that group will grow, on average, by 400,000 people every year for the next 10 years.
While the near-term supply issues create some uncertainty, the longer-term outlook for apartment demand appears well supported by the age composition of the demographic. Further, as Seattle performs well relative to other U.S. cities as a creator of new-economy jobs, there is a strong argument that it will capture more than its share of young workers, many of whom will occupy apartments.
As rents in the Seattle area have generally risen between 10 percent and 20 percent over the last three years, and mortgage interest rates continue to be at historic lows, the prospect of a home purchase has become increasingly compelling for many renters. Many current renters recognize that relatively low pricing on homes and historically low interest rates are tipping the balance between whether it is cheaper to buy than rent.
No long-term pessimism
Depending on the assumptions used, many areas of the Seattle metro area are less expensive to buy than rent. Attrition of apartment residents to homeownership had a materially negative impact on apartment occupancy in the heat of the market years, 2004-06, and sellers today see a recurrence of that trend as a distinct possibility.
Apartment optimists cite several countering factors that mitigate the risk of mass movement of renters to owned single-family homes or condominiums. First, many among the Echo Boom generation have come into their financial maturity watching older peers get hurt financially through home ownership. Pricing news continues to be unclear, with seemingly conflicting reports on price changes and foreclosure activity.
Coupling the risk of homeownership (real or perceived) with a current propensity to “de-leverage” and the ever-increasing value workers place on labor mobility suggests that the housing recovery will be slow and steady and less likely to be materially disruptive to apartment operations.
Further, the apartment optimists cite the possibility of tax reform impacting the deductibility of mortgage interest, which effectively increases the cost of home ownership and, all else being equal, creates additional financial incentive to rent.
Finally, the apartment optimist can always counter with the argument that Seattle has permanently become a global gateway market with stable new-economy job creators that will support apartment demand as well as multiple barriers to supply, both geographic and political.
Though sellers may currently have concerns over asset prices, near-term supply and the dynamics of the housing market, it is difficult to project a long-term pessimism about the Seattle apartment market.
PCC, Apartments Slated for Columbia City
By Eric Pryne - Seattle Times
PCC Natural Markets has agreed to lease most of the retail space in a proposed apartment complex in Seattle’s historic Columbia City, and construction could start around midyear, developer Security Properties said Thursday.
The six-story project, called Angeline, would be built on 1.5 acres fronting Rainier Avenue South and South Edmunds Street. It’s now the site of Columbia Plaza, a retail mall built as a supermarket in the 1950s.
Angeline would contain 193 apartments and about 30,000 square feet of retail, with PCC’s grocery occupying 25,000.
Seattle-based Security said it expects Angeline will open in 2015.
The grocery will be PCC’s tenth. The cooperative’s Fremont store is in another Security apartment project, Epicenter.
City planners approved Angeline in August, but since it’s within the borders of the Columbia City Landmark District it also must be approved by city historic-preservation officials.
The Landmarks Preservation Board gave its blessing to the preliminary design last fall, said Rebecca Frestedt of the city’s historic-preservation office.
The developer presented the proposed final design — materials, finishes, colors — to the advisory Columbia City Review Committee last week.
The property, in the middle of the rejuvenated Columbia City business district and about four blocks from the Columbia City light-rail station, has been targeted for redevelopment for more than five years.
HAL Real Estate bought it in 2007 and proposed a 306-unit apartment complex. But the landmarks board rejected that project, concluding its bulk and scale didn’t fit the neighborhood’s character.
Other apartment developers also have shown interest in Columbia City.
Last fall Harbor Urban completed 124-unit Green House, the neighborhood’s first market-rate complex in more than 40 years.
And late last month Arizona-based apartment developer The Wolff Company purchased the 6-acre Zion Preparatory Academy campus for $11 million. The seller, a group headed by Seattle developer Jim Mueller, had bought the property from the Christian school in 2009.
Wolff representatives did not return calls seeking information about their plans for the site, where Zion Prep still is a tenant.
Security Properties Makes Santa Rosa Buy
By Natalie Dolce - GlobeSt.com
SANTA ROSA, CA-Security Properties Inc. has teamed with Real Estate Capital Partners to purchase Redwood Park apartments, a 156-unit apartment project here in Santa Rosa, CA. The property was acquired by Security Properties through the firm’s Security Properties multifamily fund for a purchase price of $24.5 million.
According to the firm, the property is well positioned for strong rental performance. “Redwood Park has so many of the amenities we look for in a top tier residential rental community,” says David Dufenhorst, chief investment officer for Security Properties.
Purchased from Redwood Park Apartments Ltd. Partnership, Security Properties plans to make upgrades to various features onsite, including the leasing office, clubhouse, common area amenities and signage and branding. As part of the purchase, Security Properties will deploy Madrona Ridge Residential, its integrated property management company, to assume management responsibilities and provide residents with outstanding service.
“At just 15 units to the acre and with beautiful grounds accentuated by mature redwood trees, Redwood Park blends well with the natural beauty of the surrounding wine country region while offering close proximity to shopping and other community amenities tenants desire,” explains Stephen Henry, a VP of investment management for Real Estate Capital Partners.
The Redwood Park Apartments were built in 1986. Since that time the Santa Rosa community has experienced significant growth. “We see Redwood Park as an excellent investment and fit for the Security Properties Multifamily Fund,” says Dufenhorst. “Our intention is to make several improvements to the property in order to provide a superior residential environment while maximizing the return on our investment.”
This is the 13th property acquired under the Security Properties Multifamily Fund, which has made investments, either directly or on a joint-venture basis, in approximately $270 million worth of properties since mid-2011. It is comprised of approximately 1,600 units across multiple geographies, according to a prepared statement. The acquisition marks the second partnership between Security Properties and Real Estate Capital Partners.
Security Properties Strikes Deal for Residential Project in Bellevue’s Spring District
By Marc Stiles - Puget Sound Business Journal
Security Properties plans to start construction next year on a 316-unit apartment project in the Spring District, a 36-acre development in Bellevue, company Chief Development Officer John Marasco said Tuesday.
Security Properties and Wright Runstad & Co., the Seattle-based developer of the 16-block Spring District, said Security will buy 2.5 acres. Security also will have an option to develop another 225 units on an adjacent property, Wright Runstad President Greg Johnson said.
The companies did not disclose how much Security Properties will pay for the land. The deal will close before construction begins, and “our schedule is (at) this time next year we’ll be under way,” Marasco said.
The Spring District will be the first development project on the Eastside for Seattle-based Security, which has bought or developed more than 66,650 residential units.
About five years ago, Wright Runstad and financial partner Shorenstein Properties, a private real estate investment company based in San Francisco, paid Safeway $68 million for 36 acres on the east side of Interstate 405 near the intersection of state Route 520.
The plan is to transform the industrial district into a walkable, mixed-use development by “melding the warehouse vibe with a neighborhood feel and leading-edge design features,” according to a joint statement by Wright Runstad and Security Properties. They want to extend downtown Bellevue across 405 by creating a place that appeals to “urban-hip residents” and high-tech companies.
Turning a center of blue-collar activity in suburbia into a trendy urban neighborhood is a heavy lift, but it can be done, said Johnson, who pointed out that this is what happened with the Pearl District in Portland.
The Spring District is near a growing job center. Bellevue officials forecast that the number of jobs downtown will increase more than 60 percent to 70,300 by 2030. In addition to its location near the intersection of I-405 and SR 520, the Spring District will have a light rail stop in 2023, and it’s next to medical centers.
“Anyone of those things is a huge indicator that you’ve got a great location, and this location has them all,” Johnson said.
Security Properties is planning five apartment buildings that will range from four to eight stories each. It will be part of the district’s first phase that also will have six office buildings and a two-acre park.
Wright Runstad is an office developer and will start by constructing two of the six office buildings. Johnson said his company could begin building the offices before leasing space to tenants.
“That’s a discussion that is under way internally,” he said.
Finding a large block of Class A office space in Bellevue is becoming increasingly difficult. The vacancy rate has dropped from nearly 15 percent two years ago to less than 9.5 percent, according to the Broderick Group, which is marketing the Spring District office space to prospective tenants.
Security Properties’ development is critical to the Spring District because it will set the tone. The company has developed successful projects in urban neighborhoods, such as Fremont and Ballard in Seattle.
Marasco said the key is tailoring something to each location. “We don’t do cookie-cutter,” he said.
The Spring District apartment building will be distinct from competing properties in downtown Bellevue, Marasco said, adding it’s important to establish a sense of place.
Security Properties is working with Seattle design firm GGLO on the design. The five buildings will be built over underground parking and be centered around a courtyard that will be just over an acre. The buildings also will sit at the southern end of the district’s two-acre park.
The light rail station will be at the north end of the park, and the first thing passengers will see when they get off of the train will be the steel-construction, eight-story apartment building.
Marasco said that Security Properties does not yet have a financial partner but is talking to institutions. “We have a lot of interest in this location,” he said.
Columbia City Complex to Start in June
By Journal Staff - Daily Journal of Commerce
Seattle's Landmarks Preservation Board has approved The Angeline, a six-story complex in Columbia City, clearing the way for Security Properties to begin construction in June.
A 25,000-square-foot PCC Natural Markets will anchor the project at 4801 Rainier Ave. S., and there will be 193 apartments above and another 4,000 square feet of retail space.
Bumgardner Architects designed the project, and S.D. Deacon is the general contractor.
PCC also anchors Security Properties' mixed-use complex in Fremont called Epicenter.
The Angeline will be set back from the street to reduce its scale and make it more consistent with the size of other nearby structures. The team wanted open facades and setbacks to encourage people to walk through the site to nearby Columbia Park.
It is designed to appeal to people who want to live near the Link light rail station, which is three blocks west on Martin Luther King Jr. Way South. The PCC entrance will face west toward the park and the light rail station, rather than face Rainier Avenue.
South Angeline Street will be extended through the site and a new street, Park Drive, will be created. The streets will be designed to serve pedestrians first and cars second, similar to Pike Place Market and other alleyways in Columbia City.
The 1.5-acre site is in one of the city's seven historic districts, and reflects Columbia City's history as an early 1900s mill and railroad town.
Though the project is in the historic area, it has a modern design. City guidelines say new structures should be “of their time” to avoid confusion with historic sites, but the building still had to complement the historic character of the neighborhood.
The preservation board said areas that will function as “portals to Columbia City” will have dark brick walls and black window frames, similar to some nearby buildings.
Security Properties closed a deal last week to buy the land from HAL Real Estate for $7.18 million.
Chelsea Heights Complex Sells for $18.8M
By David Phillips - GlobeSt.com
Hendricks-Berkadia tells Globe Street that it has completed the sale of Chelsea Heights, located at 603 J Street in Tacoma.
The 78-unit apartment community was sold for $18,800,000 or $241,026 per unit. Built in 2010, the four-story, Class A apartment community offers one and two-bedroom floor plans. The seller was SP Chelsea Heights L.P. of Seattle, a joint venture between Security Properties, Inc. and Real Estate Capital Partners. The Buyer was CR Chelsea Heights Communities LLC of San Diego, an entity controlled by ColRich Multifamily.
The transaction was negotiated by Kenny Dudunakis of the Seattle office of Hendricks-Berkadia, and Jim Jensen of the Tacoma office of Hendricks-Berkadia.
The Seattle metro-area vacancy rate fell 20 basis points to 3.8% by the end of first quarter. Rents increased 5.4% year over year, reaching $1,080 per month.
Security Properties pays $49.55M for Mukilteo Apartment Complex
By Marc Stiles - Puget Sound Business Journal
A 294-unit apartment property in Mukilteo sold this week for $49.55 million.
The buyer, Seattle-based Security Properties, teamed up with an institutional investor to buy the property, which is called On the Green at Harbour Pointe. The property at 12303 Harbour Pointe Blvd. is next to a golf course. Officials of Security Properties said they could not name the co-investor.
Pacific Urban Residential, which has offices in California and Seattle, was the seller.
The acquisition nearly doubles the number of units that Security owns in Snohomish County to 600 in three properties. Security is actively buying and building apartments in the Puget Sound region. It’s building large projects in Seattle and Bellevue.
The company’s chief operating officer, Tim Overland, said his company approached Pacific Urban Residential about buying On the Green. He said Security Properties is optimistic about the Snohomish County market’s fundamentals because fewer units are being built there than in King County.
Overland said his company’s “going-in cap rate,” or anticipated rate of return, is 5.5 percent. The buyers secured a 10-year Freddie Mac loan at just over 3.6 percent.
Security Properties Chief Investment Officer David Dufenhorstsaid the company will undertake “a light rehab” of On the Green. The new owners plan to spend $6,200 per unit on the upgrade.
Dave Schumacher, a Seattle apartment broker with Colliers International, said On the Green has gone through an extensive renovation in recent years. Schumacher worked on the deal with colleagues David Mortensen and Dylan Simon.
Center for Active Design, NYC, New Case Study - bridges@11th
Project: Bridges at 11th Seattle, WA Housing Development 235,000 SqFt
Expected completion: Summer 2014
Project Architect/Landscape Architect: GGLO, LLC
Project Partners: Security Properties, University of Washington, Seattle Children’s Hospital
Project Summary: Bridges at 11th is a newly developing, transit-oriented, housing development in the heart of the University District in Seattle. Driven by the workforce housing needs of the University of Washington and Seattle Children’s Hospital, who sought housing within walking and biking distance, the project aims to foster a vibrant community within its walls and provide connections for its residents to the immediate neighborhood. To that end, the primary planning feature is the divsion of the project program into three compact and completely freestanding buildings with permeable street-like connections between them. These permeable spaces bring together the street frontage and a currently underutilized alley, making it more walkable and activity-friendly. By using new design elements such as enlivened street edges, through-block open spaces, integrated art, and iconic architecture, Bridges hopes to become a lively home with ample opportunities for physical activity for many and an asset to the Roosevelt and University District neighborhoods.
Active Design Highlights:
1. Bridges includes a multi-modal mews that connects the primary street frontage to an underutilized alley. The area is complete with pedestrian and bicycle access from the sidewalk, integrated bicycle parking, seating for varying users, planters, and close proximity to a bus stop.
2. Walkability and movement is encouraged as the project adds to the available sidewalk and green space by creating through-block public pedestrian areas. These through-block spaces break up the building massing in order to increase street connectivity and permeability for bicycles, vehicles, and pedestrians alike.
3. Thoughtful design of the pedestrian pathway creates fluid transitions between the sidewalk, plaza, and through-block connections to encourage walking for all users. Public art installations and outdoor cafes also contribute to an attractive and engaging streetscape.
4. Building exteriors include staircases that are directly accessible from the sidewalk and open spaces.
5. Rooftop landscapes are designed to provide alternative paths of travel for building residents and are directly connected to circulation stairs.
6. Building facilities like the Bike Club, bicycle racks along the sidewalk, and a ground floor fitness foom support recreational and transportation-related exercise while activating the streetscape.
7. Stairs and canopies line the sidewalk, and building facades are designed with attention to transparency and variety—all of which contributes to a human-scale, pedestrian-friendly, and lively street.
Additional project information is available at
Renovation may increase Pearl District property’s competitiveness
By Lee Fehrenbacher - Daily Journal of Commerce
The 101-year-old Honeyman Hardware Lofts building on Northeast Ninth Avenue in the Pearl District is undergoing a major renovation. Interior work includes exposing original masonry and creating a new lobby, and exterior work includes new windows and concrete cleaning. (Sam Tenney/DJC)
The Honeyman Hardware Lofts in the Pearl District are getting a makeover.
Seattle-based Security Properties is performing a substantial upgrade of the nationally registered historic property on the block bound by Northwest Hoyt and Glisan streets, and Ninth and Park avenues. The building is expected to compete with the neighborhood’s Class A properties.
“This will rent in line with the higher end of the Pearl District,” said Jeanne Muir, the owner of Urban Relationsand a spokeswoman for Security Properties. “They’re already leased (up) two months out.”
Five years ago, Security Properties proposed constructing a nine-story, retail and residential building on the block’s northeast corner. It would have replaced an existing one-story brick building constructed as a horse stable in 1903. The concept proceeded through design review, but died during the economic recession.
Now the focus is on restoration of the 101-year-old, seven-story building (a former warehouse for the Honeyman Hardware Co.) on the block’s northwest corner. S.D. Deacon recently erected scaffolding to replace the existing single-paned windows with high-performance, energy efficient ones.
Work to refresh the entire property’s interior, however, started a year ago. That project involves exposing original brick and concrete surfaces, upgrading lighting, redesigning a rooftop deck space, and creating a new lobby/leasing office that leads to the North Park Blocks. The property, which was built in phases over several decades, has never had a cohesive gathering place.
“It’s new space that really hasn’t existed for this building in its life as apartments,” Muir said.
The Honeyman Hardware Lofts’ new entrance will be directly across from the 511 Building, where the Pacific Northwest College of Art plans to move its headquarters. With that in mind, Security is creating several live-work units to try and cater to artistic professionals.
Muir declined to specify the project’s budget, but said Security Properties generally purchases buildings, makes upgrades and then holds. The company bought the Honeyman block in 2006 for $11 million.
Marcus Koch of Koch Architecture, and Patricia Gardner of A57 are working together on the interior design; R&H Construction is performing the interior construction. Western Architectural is handling the design for the exterior renovation.
The exterior won’t change much in appearance, but Koch said the interior will gain a cleaner, industrial look evocative of its lofts. Gardner said local metal artist Mike Suri will create several art installments.
“(It’s) basically just making every place in the inside 10 times better,” she said.
Construction of $2.3 billion Bellevue project starting Monday
By Marc Stiles - Staff Writer - Puget Sound Business Journal
Work will begin Monday on a massive Bellevue real estate project that has been six years in the making, developer Wright Runstad & Co. announced this week.
The $2.3 billion Spring District will rise on a 36-acre industrial property east of downtown. When completed, the project will be a neighborhood of tech offices, retail, residential and hotel buildings, parks and a light-rail stop.
General contractor Howard S. Wright will start by razing a big warehouse where Coca-Cola and other tenants operated until recently. Workers also will put in streets and other infrastructure, clearing the way for construction of some large apartment and possibly office buildings.
The infrastructure work is scheduled to be done in February and will cost up to $20 million. This is on top of the $68 million that Seattle-based Wright Runstad and financial partner Shorenstein Properties of San Francisco paid for the 36 acres on 124th Avenue Northeast near Bel-Red Road six years ago.
Coke and other tenants have moved out of the 350,000-square-foot warehouse that will be razed. “By demolishing an income-producing asset, we are taking the very dramatic step of moving into the development phase,” Wright Runstad President Greg Johnson said.
Another Seattle company,Security Properties, will build five four- to eight-story apartment buildings with a total of 316 units. Construction of the apartments is scheduled to start by June 2014, Security Chief Development Officer John Marasco said Friday.
A key question is whether Wright Runstad will start building the first office buildings. The city has approved plans for one nine-story and one 11-story tower. The buildings total 491,000 square feet.
Johnson said his company continues to “think hard” about starting to build these even though none of the space has been pre-leased.
Building office towers without any pre-leasing is risky and is not something that Wright Runstad typically does, though it has in the past.
Meanwhile, several other real estate companies are teeing up office projects in Bellevue, creating a high-stakes game of chicken. If they start building but don’t land any rent-paying tenants, they’re toast. But if they do land customers, the payoff typically is huge.
Ratcheting up the pressure is how the Bellevue office market has operated traditionally. “We are mindful of the fact that the Eastside is where tenants have to see the project under way before they commit,” Johnson said.
In a press release, Wright Runstad said what developers almost always say: that the office buildings are “attracting strong interest from potential tenants.” Johnson, however, would not comment on whom his leasing team has been talking to.
He said Security Properties’ apartments are the Spring District’s “anchor” and will “do a lot to jump start the neighborhood” that, when completed, will have 5.3 million square feet of office, residential and retail space. Johnson expects it will take 15 years to build the Spring District.
The Spring District’s light-rail stop will be part of Sound Transit’s East Link, a $2.8 billion project that will connect Seattle and Redmond. Construction of East Link is scheduled to start in 2015, but passenger service won’t begin until 2023.
Johnson said that he thinks light rail will be “a real accelerator” for the Spring District even before 2023.
Demolition Begins at The Spring District, a New Urban Neighborhood in Bellevue
BELLEVUE, Wash., Sep 16, 2013 (BUSINESS WIRE) -- Wright Runstad & Company today announced commencement of construction of The Spring District, a high-density, transit-oriented mixed-use neighborhood that will add unique apartments, authentic retail and office spaces for the tech industry in the Bel-Red corridor. Wright Runstad & Company begins construction by demolishing the former Safeway warehouse located on the south side of the site, at the corner of NE 12th Street and 120th Avenue NE .
"This is the beginning of a new kind of neighborhood in Bellevue," said Greg Johnson, President of Wright Runstad & Company. "A neighborhood designed with walkable, pedestrian-friendly streets , urban parks, cool apartments and unique local retailers and restaurants is a big switch from the typical Eastside pattern of superblocks, national chains and car-based urban designs. Earlier this year one of the region's most successful residential developers, Security Properties, committed to develop the first 316 unit multifamily apartment project in The Spring District."
A neighborhood to attract and retain talent
The Spring District, developed by a joint venture of Wright Runstad & Company and Shorenstein, will incorporate residential and office buildings designed to help tech companies attract and retain the world's best talent and meet residents' expectations for a unique urban experience. The 36-acre development is centered on a light rail station which will connect Microsoft, to the east, with downtown Seattle, to the west. The 16 city blocks will feature commercial, residential and retail tenants, including hotels, restaurants and diverse local shops, with initial occupancy projected for late 2015.
"In the war for talent, the built environment is a competitive advantage for companies looking to grow," said Johnson. "It turns out that software developers want walkable neighborhoods, transit, easy commutes, interesting amenities and sustainable designs."
Shorenstein and Wright Runstad & Company have experience building both tech campuses and new urban environments, including Amazon's original Seattle headquarters, the Twitter headquarters in San Francisco and Microsoft's initial Redmond campus in 1986.
Construction of roads and utilities will begin immediately after demolition. A neighborhood marketing center will be completed and residential construction will begin in 2014 with a new urban park scheduled for completion soon thereafter. Occupancy begins in 2015. The first 491,000 square foot office project in the district is fully designed and entitled and is attracting strong interest from potential tenants looking for occupancy in late 2015 and early 2016.
Bellevue-based Broderick Group is the broker responsible for leasing the first two office buildings in phase one of The Spring District. "The fact that The Spring District is starting construction while all of its competitors are waiting speaks volumes about Wright Runstad and Shorenstein's commitment to creating a new neighborhood," said Jeff Watson, principal at the Broderick Group. "The ability to attract and retain the best talent is paramount for growing companies who increasingly view real estate as a potential competitive advantage, and The Spring District is now on its way to becoming a hub for innovative companies."
Spring District team designing a new neighborhood from the sidewalk up
By NAT LEVY - Real Estate Reporter - Daily Journal of Commerce
When it comes to transit oriented development, many developers in Seattle are on board and eagerly building projects near transit. But with a few exceptions, car culture still rules the Eastside.
Greg Johnson wants to give Eastside people an alternative.
Johnson, president of Wright Runstad and Co., envisions the Spring District as a brand new neighborhood unlike anything else on the Eastside. It will have apartments and offices right next to parks and retail. By 2023, East Link light rail will run through the neighborhood, linking it to Microsoft, downtown Bellevue and Seattle.
Last week Wright Runstad began demolishing a warehouse, the first step in developing the 36-acre site in the Bel-Red corridor. After that, crews will begin infrastructure work. The developer is building some roads and putting in traffic lights, sidewalks and utilities.
The Spring District will have more than 5.3 million square feet of offices, retail, housing and parks when it is done. Wright Runstad and its partner, Shorenstein Properties of San Francisco, plan to invest a total of $2.3 billion.
Starting demolition “is a very significant milestone for us,” Johnson said. “If we did not see a very compelling case on the commercial and residential sides we wouldn't be making this decision, but we are.”
In the first phase, Security Properties will develop five apartment buildings with 316 units. Johnson said he chose Security Properties because he likes the unique designs it chooses. The Spring District apartments will look more like Fremont — where Security Properties' Epicenter Building sprouts giant stainless steel tendrils — than Bellevue or Redmond.
Security Properties plans to begin construction next year and people will start living there in 2015.
Phase one also will include two office buildings. Johnson said Wright Runstad doesn't have a tenant and has not decided when it will start construction. He said one building will be seven stories with 165,000 square feet, and the other will be 12 stories with 326,000 square feet to accommodate different types of tenants.
Johnson sees tech companies as the most likely tenants. He said it could be a company opening a regional office that wants more than 1 million square feet. Or a fast growing firm like Tableau could take the smaller building and leave the other to someone else.
If Wright Runstad decided to start the office buildings now, dirt could be flying by November.
Johnson said he tracks vacancy rates for large office spaces and if they continue to fall, Wright Runstad could start without a tenant. The developer has done it before with Key Center in downtown Bellevue. Johnson said that was risky, but the building was full by the time it opened in 1999.
NBBJ is designing the office buildings, Howard S. Wright Cos. is the general contractor, and Broderick Group is the leasing broker.
Transportation Solutions Inc. of Redmond is the transportation planner.
GGLO is the architect for the apartments. Jon Hallgrimson and Frank Bosl of CBRE are brokers for the residential land. Transportation Solutions of Redmond is doing the transportation plan.
Johnson views the Spring District as a weapon for tech companies engaged in the war for top talent. Tech companies have three ways to compete: money, interesting work and amenities.
There's an arms race over amenities, which have gone far beyond cool workspaces and cafeterias. Companies are building small cities around their offices with housing, transit, restaurants, sports fields and other attractions.
The Spring District can be the live-work-play place young workers want, Johnson said. Transit is coming, and Johnson said he wants local retailers and restaurants to give the neighborhood personality.
Johnson said people come before cars in all the Spring District planning.
“Everything we design in the Spring District — every street, every sidewalk, and how things flow — the pedestrian is first, the bicycle is second, the transit rider is third and the car driver is fourth,” he said. “There are millions of decisions you have to make when you design a neighborhood, but we checked them all against this hierarchy.”
Others are following Johnson's lead in the Bel-Red corridor. Just west of the Spring District, Pine Forest Properties, the property management arm of Bellevue-based Burnstead Construction Co., is planning a six-building, 1.2 million-square-foot development on 8.2 acres north of Northeast 12th Street on the west side of 120th Avenue Northeast.
Pine Forest plans 715,000 square feet of commercial space, 420 housing units, 25,000 square feet of retail and 2,200 underground parking stalls. It could be built in two phases, starting in 2015.
Johnson sees this kind of project as an endorsement of his vision, and of the neighborhood's potential.
He said Pine Forest's project will increase the population density, boost transit use, and mean more customers for restaurants and retail. Pine Forest will not share the main infrastructure costs, but it will likely improve the west side of 120th Avenue Northeast, which borders both developments.
Projects like these will create the kind of round-the-clock neighborhoods Bellevue lacks today, Johnson said. He doesn't see them competing with places like downtown Bellevue because they will attract people who want to live without a car.
“You don't have to convince everybody to get out of their car,” he said, “but if somebody does want to now you have given them an option to do so.”
Pacific Northwest College of Art building sold to Security Properties of Seattle
By Elliot Njus - The Oregonian
A Seattle apartment developer said Tuesday it had bought the Pacific Northwest College of Art main campus building in Portland's Pearl District with a plan to redevelop the site.
Buyer Security Properties paid $11.75 million for the property.
The private art school last year announced it would move into a former post office and federal office building at 511 N.W. Broadway, renamed the Arlene and Harold Schnitzer Center for Art and Design, after a $30 million makeover.
Security Properties said the college will stay as a tenant in its current main campus building, located at 1241 N.W. Johnson St., for another 16-24 months while Schnitzer Center renovation is underway.
Security Properties -- also the owner of the Honeyman Hardware Lofts in the Pearl District -- said it hadn’t yet started the design process for the eventual redevelopment, but that the site allows a building up to 120 feet high with 280,000 square feet of floor space. The company has also proposed a major apartment and retail development in Portland’s Boise neighborhood and plans to submit a design review application to the city “in the next few weeks.”
Dan Bozich of Urban Works Real Estate represented Security Properties in the transaction, and Nathan Sasaki of Apex Real Estate Partners represented PNCA.
UW and Children's employees get first crack at units in Bridges@11th
By Journal Staff - Daily Journal of Commerce
Walsh Construction broke ground yesterday on 184 apartments in Bridges@11th at 4529 11th Ave. N.E. in the University District.
Employees of the University of Washington and Seattle Children's Hospital will get priority in renting the units. The project is intended to help replace housing that was removed for a recent expansion at Seattle Children's.
The University of Washington owns the land, and has provided it on a long-term land lease to Security Properties, which will develop the site in a joint venture with a capital partner.
GGLO is the architect and will design the landscaping. Bumgardner will design the interiors.
The complex will have one, two- and three-bedroom apartments in three different buildings. Thirty-four units will be for lower-income residents.
A park-like area is planned between the north and central buildings. A pedestrian-oriented street called a woonerf will separate the central and south buildings.
The buildings will be connected at the upper levels by pedestrian bridges, giving Bridges@11th its name.
Rooftop gardens and social rooms are planned along with P-patches and pet-walking areas. Bike storage, exercise facilities and a Wi-Fi cafe will also be included.
There will be underground parking for 133 vehicles.
Bridges@11th is scheduled to open in 2015.
Bridges@11th will offer priority access to Children's and UW employees
On October 1st, partners Seattle Children’s, Security Properties Inc [SPI], and the University of Washington [UW] broke ground on the 184-unit Bridges@11th apartments, a new employee housing community with priority access for Children's and UW staff. It has been several decades since a Seattle employer has provided housing for its employees.
Bridges@11th, slated to open in 2015, is located in Seattle’s University District at 4529-4557 11th Ave NE. It is within walking or biking distance to the UW and Children’s and is just a few blocks from the Sound Transit light rail station under construction at 45th and Brooklyn. Bridges@11th fulfills Children’s commitment to replace housing that was removed for its recent Building Hope campus expansion.
Thirty-four units will initially be defined as “affordable” for those whose incomes are no greater than 75 percent of median household income, for a period of 20 years. The remainder will be market rate. While units will be available on a priority basis to employees of Children’s and UW, apartments will also be available to the general public.
UW owns the land, and has provided it on a long-term land lease to SPI who will develop the property in a joint venture with an institutional capital investor. SPI’s affiliate Madrona Ridge Residential will manage the apartments once they are available, and work closely with UW and Children’s to showcase Bridges@11th to current and prospective employees. As preferred equity investor in the project, Children’s is providing some of the financing for Bridges@11th.
Designed for a unique wine bottle-shaped site, the 184 studio, one, two and three-bedroom apartments will be spread over three distinctly different buildings with a large park-like mews between the north and the central building. The space will also include a woonerf*, a street where pedestrians and cyclists have legal priority over motorists, which separates the central and south buildings. The three buildings will be connected at upper levels with pedestrian bridges that encourage active travel and community connection between residents. This concept influenced the “Bridges@11th” namesake.
Amenities include rooftop gardens and social rooms, pea patches and pet-walking areas, an active ground-level bike club and bike storage, exercise facilities and residents’ Wi-Fi café. Ground-related units face 11th and the alley as well as the Mews at the north end, providing a welcoming, social frontage to the building along all its public facades. Underground parking is for 133 vehicles and it will include generous bike storage.
Open spaces connect the street and a currently underutilized alley, making it more walkable and activity-friendly. By using enlivened sidewalks, through-block open spaces, integrated art, and iconic architecture, Children’s, UW and SPI expect Bridges@11th to become a lively home with ample opportunities for physical activity for many, and an asset to the Roosevelt and University District neighborhoods.
Bridges @11th was recently showcased in a case study by the Center for Active Design, whose tagline is Promoting Health Through Design.
Quotes from Project Partners and Community Members
- Todd Johnson, Vice President of Facilities, Seattle Children’s: “Development of employee housing to make it easier and more affordable for our employees to live near their work has long been a priority for Children’s and the UW. In surveys with Children’s and UW employees, we learned that over 50 percent of respondents were interested in this residential environment being available to them. Because of this, we hope that Bridges@11th will help us to attract and retain workforce talent.”
- John Marasco, Chief Development Officer, SPI: “Our focus is always to find prime locations in key urban neighborhoods, and then work to create an excellent apartment community. We won a stiff competition to be the developer, manager and owner of this project, and find it rewarding to be in partnership with institutions of this importance as part of the solution for their continuing success.”
- Ana Mari Cauce, Provost & Executive Vice President, UW: “UW is glad to be in partnership with Seattle Children’s Hospital and Security Properties to develop attractive housing options for employees near campus. This project stands as an example of our ongoing commitment to support quality projects in the neighborhood and will help revitalize the area.”
- Ted Panton, Bridges@11th Project Designer & Design Director and Senior Associate at GGLO: “The primary planning feature is the division of the project into three compact and freestanding buildings with street-like connections between them. We believe this grouping of highly connected buildings will become its own tightly-knit neighborhood-within-a-neighborhood, fostering relationships between UW and Children’s employees.”
- Nick Licata, Councilmember, Seattle City Council: “Bridges@11th will contribute to the vitality of the University District. The project closely fits what was envisioned in this neighborhood in our recent neighborhood plan. It meets all the neighborhood design guidelines, including open space, mid-block passages, a lively street presence, retail where appropriate, and a mix of family-friendly and smaller units.”
Security Properties wins Vancouver apartment portfolio with $64M bid
By Wendy Culverwell - Portland Business Journal Staff Writer
Seattle-based Security Properties has prevailed in one of the greater Portland area's most competitive apartment offerings in recent memory.
Security secured three Vancouver apartment projects with an $64.45 million bid, or about $110,360 per unit for the 584-unit portfolio.
ARA Real Estate Investment Services marketed the portfolio on behalf of its Bay Area seller, Tanamar Inc.
It’s the second major Portland-area move for Security, which purchased the Pearl District home of the Pacific Northwest College of Art in an $11.75 million deal that closed last month. It will redevelop the block at Northwest 13th Avenue and Johnson site after PNCA moves to its new North Park Blocks home in 2015.
Securities' latest deal includes three properties:
- Village at Van Mall, a 128-unit complex at 5000 N.E. 72nd Ave. Constructed in 1993, the property was 99 percent occupied at the time of the sale. The property sold at a capitalization rate of 6.4 percent, representing the return on the investment to investors.
- Carriage House, a 160-unit complex at 4714 N.E. 72nd Ave . Constructed in 1993, it was 99 percent occupied at the time of the sale. The cap rate for the sale was 6.4 percent.
- Camden Place, a 296-unit complex at 4701 N.E. 72nd Ave. Constructed in 1990, it was 95 percent leased at the time of the sale. The cap rate on the deal was 6.2 percent.
Security intends to upgrade the properties and will manage them through its Madrona Ridge Residential operating arm.
Gail Neuburg, a principal with ARA Portland, led the marketing efforts.
Security Properties Closes MF Fund
By Natalie Dolce - GlobeSt.com
SEATTLE-Locally based Security Properties has closed its Security Properties Multifamily Fund, launched in June 2011. The fund acquired, both directly and through joint ventures, 2,471 apartment units located in the Seattle, Portland, the San Francisco Bay Area and Phoenix markets.
The total acquisition cost of the fund’s 17 apartment properties was approximately $390 million. The fund included a diversified portfolio of moderately leveraged apartment properties offering attractive risk-adjusted returns to investors.
The acquired properties are enhanced with a balanced mix of investment strategies—including opportunistic, core-plus, and value-add strategies that renovate and reposition the investments. “This fund allowed private investors an opportunity to allocate capital—directly and alongside major institutional partners—to a sizeable portfolio of cash flow-generating apartment properties,” says Ed McGovern, managing director of capital markets at Security Properties.
“By leveraging our industry and capital relationships, the fund offered investors participation in a broader pool of larger properties which can be managed and marketed more efficiently,” he adds. McGovern says that Security Properties used the commitments in the fund to assemble a portfolio of existing apartment properties that generates attractive cash yields, benefits from favorable tax treatment and offers a hedge against future inflation.
“Rather than employ a cookie-cutter investment program, we look at the real estate assets on an individual basis, and decide which strategies and tactics will generate the best return on investment for a specific asset,” he says.
As GlobeSt.com reported earlier in the year, one of the fund’s acquisitions was when Security Properties Inc. teamed with Real Estate Capital Partners to purchase Redwood Park apartments, a 156-unit apartment project in Santa Rosa, CA. The property was acquired by Security Properties through the firm’s Security Properties multifamily fund for a purchase price of $24.5 million.
Security Properties also recently sold its first asset in the Security Properties Multifamily Fund, called Chelsea Heights, located in Tacoma, WA. The sale of the condo-to-apartment conversion project, purchased out of foreclosure, generated a highly attractive return to investors.
The close of Security Properties’ fund comes at a time when many industry experts are pointing to apartments as one of the best-performing real estate product types. The Urban Land Institute, in cooperation with PricewaterhouseCoopers, said in a recently published report that “apartments should continue to outperform all other property types on a risk-adjusted basis, with excellent cash flow components.” The 2013 Emerging Trends in Real Estate study — part of an annual series of trends and forecast publications that reflect the views of leading real estate executives in three global regions—also expects apartment rents and project values to continue to rise in most markets, likely well into next year.
“We believe multifamily housing will continue to benefit from strong demographic and societal forces, particularly in major markets and their inner ring submarkets, with positive job creation driven by innovation, a diversity of goods and services, and connections to the global economy,” McGovern says. “We’ll continue to pursue these opportunities to provide our investors with lower volatility cash flow-generating alternatives to stocks and bonds.”
Keeping Investors Informed Pays Dividends Beyond Money
By Michael Mink - Investor's Business Daily
Once you've encouraged an investor to back your business, the relationship is just beginning. Investors can generate assets through contacts and expertise, so keep them informed. "You need to distribute accurate and synthesized information to set and manage expectations over the life of the relationship," said Ed McGovern, managing director for Security Properties, an apartment operator and investor. Whether your investors are friends or pros such as venture capitalists, keep them in the loop to maximize the relationship:
• Know the investor. "Fundraising is still a very personal, relationship-based business," McGovern told IBD. While technology has a role to play, "it's important to resist the temptation to overuse digital communications when cultivating relationships with your investors."
Strike a healthy balance with investor contact. "We definitely leverage Web-based tools to distribute information quickly and efficiently, but we don't let that interfere with the client that has an atypical question or needs a simple issue addressed," he said.
• Target material. McGovern suggests giving investors information they can consume on their own time, such as newsletters. He also advises companies keep their website updated with research studies, news releases, and links to company and industry press coverage.
• Be upfront. That includes dishing out bad news, which is crucial.
That's from Nick Lazaris, CEO of Coravin, which designs and markets products to pour wine from a bottle without pulling the cork.
"Investors will appreciate that the leader is not only honest and straightforward, but is dealing with the issues at hand," he said.
Greg Lambrecht, the founder of Coravin, said the simple act of keeping investors up-to-date "eliminates unnecessary surprises."
• Staff appropriately. Ensure you have the infrastructure in place to disseminate information to investors. McGovern shares that "today's investor wants to know you have an array of competent and responsive people who are exposed to industry trends, communicate well internally and really understand their responsibilities."
• Pick your audience. Select the right investors — those who can invest in future rounds and who have "the industry knowledge and connections in your field that may lead to important hires and solutions to strategic problems."
• Network.Putting into practice methods to keep investors up-to-date lays the groundwork to finding new ones too. Since raising capital can take hours a day, "it's important to spend your time finding investors who share your thesis about your market and vision instead of trying to change the minds of those who don't."
So said Jef Holove, CEO of Basis, which makes advanced health trackers: "Consider raising money even when you don't need to be. Your negotiating position will be better, and you are likely going to need more than you think."
• Use investor expertise.Give applicable ones board positions and engage them in problem solving, suggests Daniel DeMeo, CEO of Capital Access Network , which helps small businesses find capital. "By engaging our investors in interim problem-solving sessions, the frequent and focused interaction allows them to become more deeply invested in the business and its performance," DeMeo said.
Rebuilding Together Seattle repairs home in Central District
By Megan Hill - CentralDistrictNews.com
Some six million low-income families nationwide live in substandard housing, with broken heating and plumbing, holes in walls and windows, roach and rodent infestation, falling plaster, crumbling foundations, insufficient fire prevention, and leaking roofs.
Today, thanks to the nonprofit Rebuilding Together Seattle, that statistic has one fewer person.
Rebuilding Together recently worked on the home of Cuba Johnson, a Central District resident and 74-year-old widow of a veteran living alone. Her home is frequented by her children and grandchildren.
But Johnson has trouble moving around because of an arthritic knee, and her home was in need of several repairs. Last Saturday, November 23, volunteers from Madrona Ridge Residential and Security Properties spent a day at her home and rebuilt her back steps, removed clutter and broken appliances, replaced roofing and siding, and repaired gutters.
The project was part of Rebuilding Together’s inaugural Safe at Home Impact Day, which included 10 projects around Seattle with 100 volunteers from 65 local businesses providing free home restoration to low-income families. Johnson’s home was also the 1,000th house restoration project since Rebuilding Together Seattle’s founding in 1989.
Rebuilding Together is a national nonprofit that performs home rehabilitations for low-income residents at no cost to the homeowners.
Price jump seen for old Bellevue apartment complex
By Marc Stiles - Puget Sound Business Journal
Five years ago, near what was then the top of the apartment market, Security Properties paid $28.75 million for a “tired” property in Bellevue. On Thursday, Security sold it for nearly $42 million.
The 31 percent increase in the value of Edgewood Park Apartments surprised even Seattle-based Security Properties, and shows that prices are increasing in suburban areas, not just the urban cores.
Across the Puget Sound region, it’s been a good year for apartment investors. According to Dupre + Scott Apartment Advisors, a Seattle company that tracks the market, demand for apartments increased by 8,200 units, driving rents up almost 7 percent.
Security Properties Chief Operating Officer Tim Overland said the increased value of Edgewood Park is a product of both the market and the improvements that Security made to the property at 1501 145th Place S.E. in the Lake Hills neighborhood.
Built in 1980, “it was tired and needed some capital spent on it,” said David Dufenhorst, Security’s chief investment officer. Washers and dryers were put in the 195 units, the buildings were re-roofed, landscaping was added and the pool and leasing office were upgraded. The total cost was around $5.5 million.
This, along with a tightening market, drove up rents at Edgewood Park from an average of $1.12 to $1.64 per square foot.
Security Properties, which has bought or built 453 complexes, is not in the mood to sell. But its partner on Edgewood, the Tuckerman Group, was acquired in January and started winding down funds. Tuckerman wanted to test the market.
“When we started getting offers, they were probably 10 percent higher than we anticipated,” Dufenhorst said. When Acacia Capital Corp., of California, made an all-cash offer and agreed to quick closing, “everybody got a lot more motivated to transact,” he said.
Security Properties' tack of not wanting to sell assets is reflective of what's going on in the greater market. So far this year, there have been 295 apartment sales. Dupre + Scott said sales activity will be well below the peak year of 2005, when investors bought 660 properties.
Dupre + Scott, in its latest report, said landlords are not eager to sell because they think the market has not yet reached its peak.
Dufenhorst said that Acacia’s going-in capitalization rate, or anticipated rate on return, is around 4.9 percent. When it bought the property five years ago, Security’s cap rate was 3.9 percent.
Acadia plans to make more improvements to Edgewood, Dufenhorst said. Officials of San Mateo, Calif.-based commercial real estate investment company Acacia were not immediately available.
The strength of the region's apartment market is spurring significant development. Developers this year opened close to 8,000 new units, the most in more than 20 years, according to Dupre + Scott. But because demand outpaced this number by 200 units, vacancy fell from 4.8 percent in September to 4 percent.
A big test for the market is what will happen over the next few years when developers are expected to open 40,000 new units. Are they building too much? Dupre + Scott, in its most recent report, said only time will tell.
Group Celebrates 1000th House Restoration With New Holly Project
By Rainier Valley Post
SEATTLE – Volunteers from Rebuilding Together Seattle, Madrona Ridge, and Security Properties recently completed the first ever Safe at Home Impact Day by helping 10 families in one day in the greater Seattle area at no cost to the individuals served.
In the Holly Park neighborhood, volunteers provided a kitchen overhaul for 86 year old mother and grandmother, Bernsteen Offord. After suffering a recent stroke, Bernsteen’s family was helping care for her in her home. Volunteers installed new appliances, repaired her flooring, improved her electrical system, and repaired the gutters around the home.
That same day, Rebuilding Together Seattle celebrated our 1000th house restoration project since our organization’s inception in 1989. The organization had a special celebration at Bernsteen’s home to commemorate the charity’s important milestone.
Interested in learning more about the programs of Rebuilding Together Seattle (including volunteer opportunities and how to receive help at your home)? Visit www.rtseattle.org or call 206.682.1231.
Newsmakers of 2013: Launchers (Year in Review)
By Steven Goldsmith - Assistant Managing Editor - Puget Sound Business Journal
Greg Johnson - Construction started this fall on the Spring District, an audacious plan by Seattle real estate company Wright Runstad to turn a 36-acre industrial area into an urban neighborhood. Shaping this new Eastside zone -- which over 15 years is to grow to hold 5.3 million square feet of office, residential, hotel and retail space, along with parks and a light-rail station-- is Wright Runstad President Greg Johnson. Crews recently tore down a big warehouse and are building streets and other infrastructure to make way for the new towers. Security Properties plans to start building the apartments in June.
Look West for Hot Housing Markets
By Althea Chang - Big Data Download - CNBC
Real estate investors interested in up-and-coming areas should look for multifamily homes in the West, according to one property manager.
The hottest markets include New York, Houston, Dallas-Fort Worth, San Francisco and San Jose, Calif. Apartment vacancy rates have fallen as populations have grown and units converted to condos.
In addition, single people are increasingly living alone, according to Security Properties Managing Director Ed McGovern.
Portland, Ore., Seattle, Phoenix and Las Vegas are also getting more popular, he said.
Portland has been drawn young people with its cultural and recreational amenities. Phoenix’s successful campaign to get companies such as Apple and Intel to establish operations there has lured many young, single job seekers—making apartments even scarcer.
About 42 percent of rentals in Seattle are occupied by just one person, versus 40 percent in San Francisco, McGovern said. The number of 18- to 34-year-olds in the U.S. who live alone has risen to 5 million from about 500,000 in the 1950s, he added.
Seattle Developer Looks to Revitalize Struggling Greenwood Block
By Kiersten Throndsen - KomoNews.com
SEATTLE -- Kate Martin has known it for years - 85th Street in Greenwood has a lot of potential. But, she says, support to actually turn the area around and make something happen has been missing.
So when a Seattle-based development company recently showed interest in bringing new life to the neighborhood, Martin got excited.
"That site has been pretty pathetic for a long time," she said. "It would be very good for our neighborhood to have it repaired."
Martin, a Greenwood activist who is running for Seattle mayor, said the south side of Northwest 85th Street is in need of some love and for the first time in a long time she feels hopeful that could happen with Security Properties' idea.
"This is the first time we have had a highly qualified developer who lives very close to Greenwood, and I think he understands what we need," Martin said. "This is not at all the kind of developer who will leave us with vacant commercial space on the ground floor."
In November, Security Properties approached the Greenwood Community Council with early plans for a mixed-use residential/retail development at the corner of First Avenue Northwest and Northwest 85th Street.
"We view Greenwood and Phinney Ridge as one of the next up and coming neighborhoods in Seattle," said Ned Clapp, development manager with Security Properties. "It has a long history of establishing terrific character and that's what we look for in our proposed developments."
Clapp said while they are still in the very early stages, Security Properties met with city officials to discuss their interest and their idea, which would include ground-level retail and apartments taking up roughly a two-block space, between First Avenue Northwest and Third Avenue Northwest.
The kind of development proposed in Greenwood is similar to what's been done by Security Properties in neighborhoods across Seattle, including Ballard and Fremont. The On The Park and The Epicenter developments each feature mixed-use residential complexes with grocery stores on the ground floor.
Most recently, the company announced plans for a new development called the Angeline in the heart of Columbia City. This 193-unit apartment complex along Rainier Avenue South will feature a PCC Natural Market in an area of town Security Properties says has been lacking a full-service grocery.
The success these developments have seen in securing big-name anchor retail tenants is something Angela Cherry, a member of the Greenwood Community Council, believes could really help their neighborhood. "For the most part the (Greenwood Community) Council's response was pretty positive," Cherry said. "This is a space that has been vacant for several years, and it tends to have a harder time getting successful businesses to stay."
Security Properties is moving forward with concept and design plans for the Greenwood site, but Clapp said they are also waiting to see what happens with a proposed rezone along the south side of 85th Street.
The rezone under consideration includes a pedestrian overlay, which according to the Greenwood Community Council could create disadvantages for ground floor businesses wanting to open along that stretch of road due to parking limitations.
In December, the community council submitted a letter to the city in opposition of the pedestrian overlay proposal, asking city officials to leave the zoning on the south side of 85th Street as it stands today - neighborhood commercial without a pedestrian overlay.
The Planning, Land Use and Sustainability Committee will take this issue up during a meeting in late February, and depending on the outcome of the meeting Security Properties' development plans for the Greenwood could change.
North Portland development’s design now more pedestrian friendly
By Lee Fehrenbacher - DJC Oregon
Seattle-based Security Properties has revamped its plans for a six-story, 260-unit apartment development on the North Williams Avenue-Vancouver Avenue corridor, and the result is a more pedestrian-oriented design with smaller commercial spaces in lieu of an anchor space.
The development company last week submitted its application for a Type II design review with the Portland Bureau of Development Services, following early advisory meetings with the city and Boise neighborhood stakeholders, according to an announcement Security Properties released Tuesday.
Plans originally called for Orchard Supply Hardware to serve as the development’s anchor tenant, but the hardware retailer pulled out of the deal in September. Jeanne Muir, a spokeswoman for Security Properties, said Orchard Supply Hardware’s departure allowed redesign so that spaces would cater to pedestrians rather than truck drivers.
“It had been designed around having a 65-foot truck to serve Orchard Supply,” Muir said. “Once that no longer became key to our strategy, we were able to turn that central courtyard into much more of a woonerf.”
A ‘woonerf‘ is an area designed for pedestrians but shared by cars. Security Properties envisions a 21,000-square-foot central courtyard that leads to residential stoops, patios and the entrance to the vehicle garage, which will have 240 stalls. The company also plans to include 300 bike stalls.
Ground-floor retail space on North Williams Avenue will run from Mason to Skidmore streets, while the facade along North Vancouver Avenue will remain mostly residential. Those units are slated to be three-story townhomes in order to better mirror the single-family homes across the street, according to the announcement.
For the interior courtyard, Security Properties is introducing “live-make” units – a twist on live-work units, but with an emphasis on production. The company added the units in response to residents’ desire to continue the corridor’s industrial tradition of making things.
Security Properties closed on the purchase of the 91,000-square-foot, full city block from the Oregon Association of Minority Entrepreneurs in December for $4.2 million. OAME will remain in the existing 40,000-square-foot building until construction starts in 2015.
The project’s designers are Portland-based Myhre Group Architects and Seattle-based Bumgardner. Security Properties will present its updated plans to the Boise Neighborhood Association’s Land Use and Transportation Committee on Jan. 27, at 7 p.m., at the Q Center, 4115 N. Mississippi Ave.
Michael Nanney, director of multifamily development for Security Properties, said in a prepared statement that the company anticipates being able to potentially incorporate additional elements suggested by neighborhood residents as officials work with city staffers to finalize plans.
New 268-apartment project at Skidmore and Williams will have a Dutch 'woonerf' space
By Michael Andersen - BikePortland.org
A large lot on inner North Portland's Williams Avenue corridor would become one of the city's biggest new housing-retail projects under a proposal made public last week.
The site between Williams, Vancouver, Mason and Skidmore that currently hosts the Oregon Association of Minority Entrepreneurs and Ethiopian restaurant Dalo's Kitchen would get 268 apartments and townhouse-style units plus, 25,370 square feet of commercial space and what the architect calls a "woonerf" running down the middle of the block: a narrow Dutch-style street that allows cars to pass through but treats them as "guests."
The project is the latest in a building boom that's about to change Williams — nationally known as an example of "bike-oriented development"— in much the way Southeast Division Street has changed in the last year.
"Within two to three years, you're going to have over 1,000 new residents in that stretch, you're going to have 300 office workers," said Stephen Gomez, land use chair of the Boise Neighborhood Association. "Williams is going to be a completely different street."
The planned complex, which will consist of a six-story building along Skidmore, a five-story building along Williams and a three-story building with front stoops facing Vancouver Avenue, would sit on top of a new underground parking garage with 237 auto parking spaces, 185 of them for residents. The other 52 stalls will serve the commercial space, which will be slightly smaller than the 30,000-square-foot New Seasons store built a few blocks away in 2013.
Boise NA president Kay Newell said she's been impressed with the project's supply of auto parking — there'll be enough spaces for two-thirds of apartment dwellers to park a car on site if they choose — and its development team, which approached her and other key neighbors about a year ago, long before they even bought the site.
"They listen to our suggestions, modify them and use whatever they can," Newell said. "I wish that all of the builders had these same standards. ... We've got some good developers in the community, but these guys are outstanding."
Gomez agreed, at least as far as this project was concerned.
"They're using for the most part good-quality materials: brick, metal, good window systems," he said. "It's a good project."
A public comment period for the project's design review process began on Friday and continues through March 28.
This is the latest chapter in an interesting story for the block. Donated to the nonprofitOAME by PacifiCorp in 1990, it was sold at approximately market price 15 years later to what Willamette Week described as "a group of the nonprofit's insiders." It continues to serve as OAME's headquarters. City records show the property changed hands again last December, again at approximately market price. The city lists its current owners as a Seattle investment company and SP Williams LLC, an anonymous corporation registered in Delaware.
Here's the project's description of the "woonerf" area, which runs north-south along the route an alley might run if it were a subdivided block:
The interior of the site between the buildings is developed as a shared pedestrian and vehicle space or ‘woonerf’. Under Dutch law the term has specific legal meaning, but in North American usage woonerf generally means shared pedestrian and vehicle space with a brick or paving block surface. ... A variety of scored and colored concrete paving treatments, as well as raised planters and bollards, help to define the vehicle and pedestrian zones in the woonerf. Six units in the Williams Building face the woonerf at ground level, have attached internal garages, and are identified by the applicant as ‘live-make’ units that could serve as shared residential/commercial units. The north end of the woonerf includes a large loading stall underneath the overhanging upper floors of the Skidmore Building, which is broken apart at the ground floor ‘portal’ to provide through woonerf traffic. The western portion of the woonerf is developed as a pedestrian-focused space with stoop access to units in the Vancouver Building, large stormwater planters, and bench seating.
Woonerfs are common in the Netherlands, where they have special legal status that gives people on foot or bike the right of way. Similar designs have been popping up recently inSanta Monica and Seattle. Last summer, a new state law cleared the way for Oregon cities to, if they wish, give people on foot the right of way on residential streets that are less than 18 feet wide.
But whatever its legal status, Newell is enthusiastic about the woonerf area as a way to safely allow occasional loading and unloading while giving people a place to socialize outdoors.
"There'll be one or two commercial spaces that can open up into that space," Newell said. "It'll be like a community courtyard."
Purchase of Reserve at Northglenn
SEATTLE – Security Properties Inc. has acquired the 220-unit Reserve at Northglenn Apartments located in Northglenn, CO for $23.5 million.
The Class A property located at 11450 Community Center Drive consists of affordable apartments for individuals earning less than 60 percent of area median income. The property represents the fourth such acquisition by Security Properties in Denver over the last fourteen months. With the acquisition, Security Properties now owns approximately 1,500 apartment units in Denver.
“Denver is one of our main strategic growth markets given the strong market fundamentals and quality lifestyle experiences for our residents.” said Bryon Gongaware, Managing Director of the firm’s Affordable Housing Group.
Security Properties teamed with Enterprise Community Investment, Inc. and Adams County Housing Authority to acquire the property from SunAmerica and Trammell Crow Residential. “We are excited about the key partnerships we structured with Enterprise and Adams County Housing Authority for the preservation of this quality affordable housing community,” added Gongaware.
Built in 2001 the community provides residents with convenient access to downtown Denver, retail and employment centers and recreational options. The property is a mix of one-, two- and three-bedroom units and includes washer and dryer hookups in each unit, an outdoor pool, fitness center and garages.
Security Properties will invest additional capital for improvements to both the interior and exterior of the property. Along with the improvements, additional units will be set-aside for residents earning 30 and 50 percent of area median income.
Sellers were represented by Tim Flint of Tax Credit Group of Marcus and Millichap, and Fannie Mae financing was provided by Tim Leonhard of Oak Grove Capital.
For more than 40 years, Security Properties has provided quality housing to its residents as well as excellent financial performance for its investors. Over time, Security Properties has acquired or developed over 66,500 residential units at a cost of over $3.35 billon. Security Properties maintains a focused multifamily strategy supported by integrated teams of professional acquisition, development, construction, investment, and property management specialists.
Enterprise works with partners nationwide to build opportunity. They create and advocate for affordable homes in thriving communities linked to jobs, good schools, health care and transportation. Enterprise lends funds, finance development and manage and build affordable housing, while shaping new strategies, solutions and policy. Over more than 30 years, Enterprise has created 300,000 homes, invested nearly $14 billion and touched millions of lives.
Adams County Housing Authority has a 40 year history of providing a range of affordable housing options to the residents of Adams County, Colorado.
Security Properties Grabs 192-Units in Las Vegas
MHN Online - Multihousingnews.com
Las Vegas—Security Properties has completed its first property acquisition in Las Vegas with the purchase of Desert Shadows. The 192-unit community is located near the Summerlin submarket of northwest Las Vegas, and is is the second purchase by Security Properties Multifamily Fund II.
The asset was acquired for $23 million through a joint venture with a larger institutional player. Grandbridge/BB&T Bank provided the mortgage financing, and Security Properties will use its integrated property management company, Madrona Ridge Residential, to run day to day operations. In addition, the firm plans to inject $1.1 million in capital to enhance the leasing office, paint the exterior, upgrade landscaping and enhance common area amenities. The property will also be rebranded as CenterPoint.
“The combination of a high-quality asset purchased off-market and the property’s proximity to employers and amenities made this a smart strategic investment for us,” says David Dufenhorst, chief investment officer at Security Properties.
The seller was a local developer, who built the asset in 2007.
Sound Transit narrows list for Capitol Hill TOD
By Journal Staff - DJC.com
Sound Transit has selected the finalists to develop four sites around the future Capitol Hill light rail station.
The teams now are invited to submit development proposals.
Here are the short-listed firms: Gerding Edlen, Lowe Enterprises Investors, MacFarlane Partners, Security Properties, The Wolff Co., Bellwether Housing and Lennar Multifamily Communities. Capitol Hill Housing made the list individually and also as part of a team with Jonathan Rose Cos.
Three of the teams want to develop all four sites: Capitol Hill Housing and Jonathan Rose, Gerding Edlen and MacFarlane Partners. The other teams want to develop one or more sites.
Fourteen groups responded to the agency's request for qualifications. CenterCal Properties, Emerald Bay Equity, Lake Union Partners, TOD Housing LLC and Westbank Projects Corp. responded to the RFQ but have not been asked to submit proposals.
A minimum of 397 apartments could be built on four sites on Broadway, between East John Street and Seattle Central Community College. At least 36 percent of the units will be reserved for low-income housing.
Sound Transit has said it wants the new development to include a public plaza for Broadway Farmers Market.
Sound Transit and a neighborhood advocacy group called Capitol Hill Champion will hold a public meeting at 5:30 p.m. June 2 in Broadway Performance Hall at 1625 Broadway so people in the community can meet the short-listed developers.
Construction on the sites won't begin until after the station is complete in 2016. Proposals are due in September, and Sound Transit said it wants to pick the winning proposals in October.
Each site has specific requirements. Some must be mixed-use, others must be low-income housing and others must participate in the city's Multifamily Property Tax Exemption program.
The Capitol Hill station is part of the $1.8 billion University Link light rail line, a 3.1-mile route from downtown to Capitol Hill and the University of Washington. The line is entirely underground.
Sound Transit said it is more than $100 million under budget and six to nine months ahead of schedule.
Value of big apartment complex in Everett tumbles
By Marc Stiles Staff Writer - Puget Sound Business Journal
In the second largest apartment sale so far this year in Snohomish County, Security Properties has paid $63.5 million for the Millington at Merrill Creek Apartments in Everett.
Seattle-based Security Properties last week paid 15 percent less than what the seller paid for the 344-unit property in 2007, at the height of the market and when the property was new. Public records show that Dallas-based Invesco Real Estate had paid just over $74.3 million for the 32-acre property.
The Millington is at 1401 Merrill Creek Parkway, two miles from the Boeing plant where 30,000 people currently work. Boeing's (NYSE: BA) work force will grow by more than 8,500 with the manufacture of the 777X jetliner.
"We believe we have acquired a quality asset at a compelling price at the right time,” Security Properties Director of Acquisitions Barrett Sigmund said in a statement.
In addition to the property's proximity to Boeing, another positive factor is that few apartments are being built in Snohomish County relative to demand, Security Properties Chief Operating Officer Tim Overland said.
Of the approximately 10,125 units expected to be completed in the tri-county region this year, only about 1,400 are in Snohomish County, according to Dupre + Scott Apartment Advisors, a Seattle company that tracks the multifamily market. The vast majority are in King County.
Overland said the Millington is the third acquisition by Security Properties Multifamily Fund II, and the fund’s second investment in the Puget Sound region. The fund now owns 722 apartment units. Security bought the Millington in a joint venture with an unnamed institutional partner.
Overland said his company has set aside $1.8 million for upgrades to both the interior and exterior of the property.
Snohomish County's largest apartment sale so far in 2014 occurred in March, according to Jones Lang LaSalle apartment broker Seth Heikkila, when Kennedy Wilson bought the 372-unit Bailey Farm Apartments in Bothell for $91.5 million from the Wolff Co.
Security Properties buys land for 309 apartments in Spring District
By Nat Levy - DJC Staff Reporter
An entity related to Security Properties bought land from Wright Runstad & Co. for a five-building apartment complex, which will be the first project in the 36-acre Spring District in Bellevue.
Property records show Security Properties paid $10.7 million for the land.
The buildings will range from three to nine stories and have a total of 309 units.
Michael Nanney, director of multifamily development for Security Properties, said the goal is to start construction by the end of the year. Security Properties is seeking building permits from the city.
Construction of the five structures will start at the same time, but they open separately, Nanney said. They will share an underground parking garage.
The location is on the southwest corner of the Spring District — along Northeast 12th Street between 120th and 124th avenues northeast. Nanney said being on a corner will allow the apartments to function as a standalone complex until the rest of the Spring District is built.
A landscaped staircase at the corner of Northeast 12th Street and 120th Avenue Northeast will serve as a pedestrian entrance to the Spring District. “We are going to have a signature project that I think is going to help put the Spring District on the map,” Nanney said.
GGLO is the architect and Walsh Construction Co. is the general contractor. Other team members are Triad Associates, Bumgardner and Cary Kopczynski & Co.
The apartments will sit about 30 feet above street level, giving every unit a view, Nanney said.
Open space will be a big feature for the apartments. Wright Runstad will build a two-acre park across the street. A Sound Transit East Link light rail station will be on the north end of the park.
Nanney said the buildings will occupy about 60,000 of the 110,000 square feet of land Security Properties bought. That leaves 50,000 feet for open space.
Ground-floor units will be offered as live-work spaces, but could be quickly converted to retail later, Nanney said, “as soon as the vibrant walkable streetscape of the Spring District comes to life.”
Security Properties has an option to develop another 225 units on an adjacent parcel.
Greg Johnson of Wright Runstad told the DJC last year he chose Security Properties to do the apartments because he likes its unique designs.
Wright Runstad and Shorenstein Properties are developing the Spring District. The $2.3 billion project will have 5.3 million square feet of offices, retail, housing and parks when it is done.
Wright Runstad's first phase will be two office buildings totaling 491,120 square feet. NBBJ is designing the office buildings, and Howard S. Wright Cos. is the general contractor.
Jeff Watson, Grant Yerke and Matt Schreck of Broderick Group are listed as brokers for the office buildings.
Security Properties Grabs Mesa Apartments for $30M
By Kristian Seemeyer - GlobeSt.com
Security Properties, along with an East Coast life insurance company, teamed up to acquire Sonora Canyon, a 388-unit apartment community in Mesa for $30 million. Security Properties had previously purchased the property in 2005, then known as University Green, for $22 million and sold it in 2007 for $33.3 million.
With this new acquisition, Security Properties is planning $2.6 million in upgrades over the next three years. The renovation scope of work includes an upgrade to the clubhouse, pool; exterior lighting and exterior paint, along with some value add unit interior improvements.
Along with other primary and secondary Western US markets, Security Properties has been active in the Phoenix Metro and its surrounding submarkets for more than a decade and it’s attracted to the area's continued population growth and the continued diversification of its employment base into the healthcare, technology, alternative energy and semiconductor sectors.
According to David Dufenhorst, chief investment officer at Security Properties, several factors prompted the pursuit of this asset. "Sonora Canyon provided us and our partner with a unique opportunity to buy an asset we knew extremely well at a significant discount to replacement cost along with the potential to add numerous value add upgrades and the catalyst of a light rail station being completed within walking proximity to the property in 2018."
Security Properties - Announcement - August 27, 2014
Multifamily real estate investor, developer and operator Security Properties today announced that after more than 20 years with the company, John Orehek will retire as president and CEO at the end of September.
At that time, David Dufenhorst, chief investment officer, and Tim Overland, chief operating officer, will respectfully assume the roles of CEO and President.
“The entire company owes John an enormous debt of gratitude,” said Security Properties’ Chairman Paul Pfleger. “Under his leadership, Security Properties evolved from its origins as a fiduciary to many private investors into a highly-respected developer, investor and operator of institutionally-capitalized residential real estate. During John’s term as CEO, the company acquired or developed more than $2.2 billion in real estate assets throughout the United States. John built a talented and cohesive team, which has created great value for Security Properties’ investors, employees and owners.”
He added, “We are delighted that members of that team will assume the leadership role and that John will remain as a trusted advisor to the company after the transition.”
Leadership Changes at Security Properties
By David Phillips | West - GlobeSt.com
SEATTLE—Multifamily real estate investor, developer and operator Security Properties says that its long-time chief executive officer and president John Orehek has retired.
Leveraging the firm’s deep and talented employee base, Security Properties’ chairman Paul Pfleger has named long-time executive David Dufenhorst (previously chief investment officer) and Tim Overland (previously chief operating officer) as CEO and president, respectively.
The new team will focus on repositioning the firm’s asset base into newer and more geographically focused target markets.
“I am extremely honored to take over the leadership of such a great organization and I look forward to working closely with our talented team to grow and strengthen Security Properties,” said CEO David Dufenhorst. “Tim Overland, the newly appointed president, and I – along with the rest of our senior management team – have ambitious plans to strategically expand our asset base and strengthen our balance sheet. Our goal is to continue providing outstanding returns to our investors and outstanding service to our residents.”
A seasoned real estate industry professional with more than 25 years’ experience in real estate— including asset management, acquisitions, dispositions, development, joint ventures, financing, tax planning and accounting—Dufenhorst has been with Security Properties for more than eight years.
Previously, he served as president of Torino Holdings, where he worked for thirteen years and completed more than $1 billion in transactions in the southwest region. Dufenhorst is a member of the several professional real estate associations. He has a masters degree in Real Estate Development from University of Southern California and Bachelors of Science in Business from the University of Idaho.
“We believe that our company is extremely well positioned for continued profitable growth, with an outstanding team in place, a compelling new business pipeline, and a focused multifamily strategy,” said President Tim Overland.
Throughout his career, Overland has been involved in the investment of more than $2 billion in real estate equity. Prior to joining Security Properties in 2008, he held investment positions with MacFarlane Partners as well as consulting roles at Arthur Anderson and PricewaterhouseCoopers.
A member of the Young Presidents’ Organization, Overland has a bachelor’s degree in economics from the University of Puget Sound and an MBA from the Haas School of Business at the University of California Berkeley. He is also a member of National Multi Housing Council, the Affordable and Workforce Housing Council of the Urban Land Institute and serves on the Board of Directors for Seattle-area non-profits Bellwether Housing and Washington Wild.
North Portland building razed
By Sam Tenney - DJC Oregon
Crews with LOI Environmental & Demolition Services are demolishing a nearly 40,000-square-foot building on the North Williams Avenue/Vancouver Avenue corridor to make way for a large mixed-use development. Andersen Construction is the general contractor on the project, designed by Myhre Group Architects for Seattle-based owner Security Properties.
Three buildings with a total of 268 residential units and over 25,000 square feet of ground-floor commercial space will be built on the site. A six-story building will occupy the north-facing portion of the block along North Skidmore Street, a five-story building will run along North Williams Avenue, and a three-story townhome-style building will be built along North Vancouver Avenue. The development will also contain a subgrade parking garage with 237 parking stalls.
Newport Crossing apartments in Newcastle sell for $38.8M
By Ben Miller - Contributing Editor - Puget Sound Business Journal
Security Properties Inc. said it's sold the Newport Crossing apartments in Newcastle for $38.8 million, two years after it bought the 192-unit apartment property for $30.35 million.
Seattle-based Security Properties said it spent $1.5 million in the past two years to repaint and reroof buildings, redesign the community pool, improve landscaping and upgrade unit interiors.
"The purchase, renovation and sale of Newport Crossing reflects our overall strategy of pursuing multifamily real estate investment opportunities in high-growth western markets characterized by sustainable job and population growth, significant barriers to development and high homeownership costs," said Security Properties CEO David Dufenhorst, in a statement.
Seattle developer, in stepping up Portland activity, breaks ground in NoPo
By Jon Bell - Staff Reporter - Portland Business Journal
North Portland's latest mixed-use project got underway this week when ground broke for Security Properties' four-building project at North Williams Avenue and North Mason Street.
The Seattle developer will build four buildings, three with ground-floor office and retail space, totaling more than 352,400 square feet. The retail and office space will offer just over 26,100 square feet of space. Plans call for 268 apartments on the upper levels.
The new development will also include a central woonerf — a pedestrian alley of sorts — and ample bike parking.
Security, which bought the 91,000-square-acre North Portland property in 2013, has been dabbling in Portland since at least 2006 and has become more active in the metro region in recent years. It paid $11 million for the Honeyman Hardware Loft Apartments in the Pearl District in 2006, $34.3 million for three Beaverton apartment complexes in 2011 and $25.7 million of the Forest Creek Apartments in Portland in 2012.
In 2013, Security also purchased Block 136 in the Pearl District, which is the current home of the Pacific Northwest College of Art. PNCA plans to move into the historic former post office building at 511 N.W. Broadway in 2015.
After that move, Security is planning to build two buildings on Block 136: a 75-foot building with ground floor retail and either office or residential above and a 150-foot tower with retail at ground level and apartments above.
Some nearby residents are not happy with the proposed tower and have formed a group to oppose it.
Revamped Pearl District apartments go for $37M
Jon Bell - Staff Reporter - Portland Business Journal
Two-and-a-half years ago, Seattle's Security Properties, with the help of Lubert-Adler Partners of Philadelphia, bought out its original partner in the Pearl District's Honeyman Hardware Lofts for $20.5 million.
Last week, Security Properties and Lubert-Adler sold the 100-unit Pearl District apartments for $37.1 million to San Jose real estate investment firm DiNapoli Capital Partners.
HFF brokered the deal, which was first reported by the Real Estate Alert newsletter .
The three-building property, located at 555 N.W. Park Ave., includes about 11,000 square feet of retail space. Before a renovation in 1991, the buildings housed a hardware store and warehouse space.
After Security Properties and Lubert-Adler bought out Equity Resource Group in 2012, the firms invested $4.6 million in a renovation that boosted the housing component up from 89 units to 100. About 15,000 square feet of retail space was converted into work-live lofts as part of the remodel.
Security and Equity originally bought the property in 2006 intending to redevelop the site with an additional 49 rental units. Instead, they put the property on the market in the fall of 2011 until Security and Lubert-Adler bought out Equity in July 2012.
Security Properties Acquires Affordable Apartments for $13.2M
Keith Loria - Contributing Editor - Multihousing News
Colorado Springs, Colo.—Security Properties has teamed with Enterprise Community Investment Inc. and the Colorado Springs Housing Authority to acquire Winfield Apartments, a 160-unit apartment community in Colorado Springs, Colo., for $13.2 million, from Academy Heights Housing Partners.
This marks the second joint venture between Security Properties and Enterprise this year, as the partnership acquired the 220-unit Reserve at Northglenn Apartments located in Northglenn, Colo. in February.
“This fits with our company philosophy. Ownership was attracted to the quality property located in a growing and dynamic area of Colorado Springs,” Bryon Gongaware, Security Properties’ managing director, Affordable Housing Group, tells MHN. “This property is the ideal affordable housing acquisition target for Security Properties, as it is high quality real estate that is well located with opportunities for operational improvements over long-term ownership.”
Located at 6134 Romley Point, Winfield Apartments is a garden-style apartment community that contains a mix of two- and three-bedroom apartments and consists of affordable apartments for individuals and families earning less than 60 percent of area median income.
Property amenities include a clubhouse, fitness center, laundry facility, professional on-site management, playground, barbeque area, available parking garages, in-unit washer/dryer hookups, balconies/patios, and air conditioning. There’s also an open green space with a park immediately across the street.
According to Gongaware, ownership will address deferred maintenance and landscaping throughout the property, with opportunities for improved energy efficiency.
Built in 2001, Winfield offers residents convenient access to major business, retail, and entertainment hubs throughout Colorado.
“The property is ideally located across the street from Pring Ranch Park and Odyssey Elementary School, within two blocks of quality commercial retail and easy access to transportation corridors along N Power Boulevard and Stetson Hills Boulevard,” Gongaware says.
The acquisition partnership assumed existing Fannie Mae financing and sourced a supplemental, co-terminus, Fannie Mae loan through Citi.
This acquisition marks the fifth property Security Properties has made in Colorado over the past two years, but it is the company’s first purchase in Colorado Springs. In total, it now owns nearly 1,660 apartments in the state.
41-story tower starts today on Minor Ave
Journal Staff - Daily Journal of Commerce
Crews from Andersen Construction Co. are preparing to break ground today on a 41-story mixed-use tower called Kinects that Security Properties is developing in the Denny Triangle.
Bumgardner is the architect. The tower is at 1823 Minor Ave., and will have 356 apartments, 4,800 square feet of retail and 315 parking spaces.
Kinects is expected to open in early 2017.
The top two floors will be penthouse units, and the top floor will have a swimming pool and outdoor spaces.
In 2008, Security Properties said it planned to break ground on the tower by mid-2009, but by then the recession was in full swing. Kinects remained on the shelf until last year, when Security Properties filed applications with the city to prepare for construction.
The block is bounded by Stewart, Howell, Boren and Minor, and it will see a lot of change in the next few years. Security Properties' project is next to the site at 1121 Stewart St. where RBF Property Group and GIS International Group are planning a 42-story condo and hotel tower.
On the other half of the block, Touchstone Corp. is planning Tilt 49: an 11-story office building and 36-story residential tower.
David Robinson, the Admiral, teams up with Security Properties on $40M Kent acquisition
Marc Stiles - Staff Writer - Puget Sound Business Journal
Professional basketball legend David Robinson and Seattle real estate investment company Security Properties have jointly paid $40.2 million for a 304-unit apartment complex in Kent.
Robinson, a member of the basketball Hall of Fame, is known as the Admiral because he was an officer in the U.S. Navy. In a fitting twist, the name of the property that his company, Admiral Capital Group, and Security Properties bought is Waters Edge. It's at 6305 S. 236th Place in the Lakes master-planned community. This is Admiral Capital's first acquisition in Seattle area.
Holland Residential of Vancouver, Wash., and Dick Keller sold the Waters Edge. They had paid $31.5 million for the property three years ago, according to public records.
Philanthropic groups in the Puget Sound region will benefit from Admiral Capital's investment. That's because Robinson and company co-founder Daniel Bassichis, formerly of Goldman Sachs, have pledged 10 percent of their profits to charities in areas where the company invests.
Security Properties CEO David Dufenhorston Wednesday said he has yet to meet the 7-foot, 1-inch Robinson, who played for the San Antonio Spurs.
"I hope he comes up for the closing dinner," Dufenhorst said.
In a press release, Robinson said he and his partners see "immediate opportunity to improve the living experience for [Waters Edge] residents while creating value for our investors."
In partnership with USAA Real Estate Co., Admiral Capital buys "value-add" office, hotel, apartments and retail properties. Value-add properties are ones that might need some sprucing up. The new owners said they will continue making improvements that Holland had started, including replacing decks and adding a playground to the 28-year-old property.
Dufenhorst said a lack of new apartment construction in South King County, along with the area's growing job base, prompted the acquisition, the latest of 19 Puget Sound area properties that Security owns. He said only about 300 new units are under construction in the south end, compared to thousands going up in Seattle and Bellevue.
While South King County apartment rents have been increasing, they haven't been going up as fast as in the city. Dufenhorst thinks this will change as the lack of new supply catches up with suburban markets as demand for apartments in places like Kent increases as more and more people are priced out of Seattle.
The number of jobs is increasing in Kent, the fourth largest manufacturing and distribution center in the United States. Amazon.com is about to open to a large distribution center in Kent, and two national retailers are looking for sites for equally large distribution centers.
Philip Assouad and Giovanni Napoli, commercial real estate brokers with Kidder Mathews, handled the Waters Edge sale.
Marc Stiles covers commercial real estate and government for the Puget Sound Business Journal.
Security Properties Multifamily Fund Acquires 178-Unit Saratoga Downs in Napa, California
APA, CA - Security Properties, in a joint venture with Intercontinental Real Estate Corporation, purchased the 178-unit Saratoga Downs Apartments for $58,050,000 through its Security Properties Multifamily Fund II. The property, located inside the city of Napa, California is the latest of eight acquisitions in the fund.
Napa Valley is the epicenter of wine production in North America which is enhanced by a robust tourism industry. The City of Napa has undergone significant development in recent years and hosts a revitalized downtown with a variety of shops, restaurants, and lodging. In addition, Napa is located 45 miles from San Francisco and is exposed to the impressive economic catalysts in the greater Bay Area.
Saratoga Downs was built in two phases on land previously occupied by the Shevland Ranch that was once a horse farm and race track. The first phase was constructed in 2006 and features 124 garden style units. The second phase consisting of 54 townhome style units was constructed in 2012. The clubhouse / leasing office for the property is a completely reconstructed horse barn which maintained many of the original characteristics.
The property is well built and is one of only five Class A apartment communities in the city. The property is nestled in a neighborhood about two miles south of downtown Napa and neighbors the Napa Yacht Club, which features access to the Napa River that feeds into the San Francisco Bay.
According to Mark Hoyt, senior director of Investments at Security Properties, several factors prompted the pursuit of this asset.
"The North Bay has been a target market for several years as cap rates are higher and supply is restricted compared to adjacent submarkets. It is extremely difficult to build new product in Napa evidenced by the fact only two market rate apartment properties have been delivered in the past decade with two more projected to be delivered in the next decade. The quality of the property is excellent and we are proud to include it in our portfolio."
Jessica Levin, director of Acquisitions at Intercontinental commented, "Saratoga Downs presents an opportunity to invest in a Class A apartment and townhome community in the supply constrained Napa market. We believe the appealing unit mix featuring 54 larger recently constructed townhome units combined with the neighborhood's strong demographic profile, nearby retail amenities and employment centers makes Saratoga Downs a great long term investment for our investors."
Security Properties Fund II and PCCP Acquire Element 170 Apartments in Beaverton, Oregon
Security Properties, in a joint venture with PCCP, LLC, has purchased Element 170 Apartments, a new construction, Class A, 243-unit multifamily property for $39 million through its Security Properties Multifamily Fund II. Located in Beaverton, Oregon, a Portland suburb, the property is the latest of eight acquisitions in the fund.
Element 170 Apartments was placed under contract in October 2013, began leasing in May of 2014, stabilized operations in January 2015 and was acquired in February 2015 by the joint venture. The location and the quality of the asset made the purchase compelling. It is immediately adjacent to the Blue MAX Light Rail Station with easy access to downtown Portland and the airport. It is within two miles of the Nike World Headquarters and approximately five miles from the Intel campus.
According to Mark Hoyt, senior director of Investments at Security Properties, "Element 170 is a great purchase as it is walking distance to a MAX station and close to several major employers, hospitals and retail. The property and the location are ideal, and we expect these factors to contribute to better-than-market revenue growth during our hold period. Finally, we were able to structure the purchase contract to lock in the price in the fourth quarter of 2013. This was an excellent outcome for our investors."
The 9.3-acre property consists of 10, four-story buildings and a leasing office/clubhouse building with amenities that include a pool, fitness center, conference room and tot lot. The upgraded units offer custom cabinetry, in-unit washers and dryers, 9-foot ceilings and vaulted ceilings in all top floor units.
"PCCP is pleased to partner with Security Properties, an experienced multifamily owner and manager throughout the Pacific Northwest," said Erik Flynn, managing director with PCCP, LLC. "The Portland region is one of the nation's top-performing areas for economic growth and this new property is well-suited to meet the needs of a growing population base seeking best-in-class apartment living."
PCCP, LLC is a premier real estate finance and investment management firm focused on commercial real estate debt and equity investments. PCCP has approximately $6 billion in assets under management on behalf of institutional investors. With offices in New York, San Francisco and Los Angeles, PCCP has a proven track record for providing real estate owners and investors with a broad range of funding options to meet capital requirements. PCCP originates and services each of its investments, ensuring that clients benefit from added value and outstanding investment returns. Since its inception in 1998, PCCP has successfully raised, invested and managed approximately $10 billion of institutional capital through a series of investment vehicles including private equity funds, separate accounts and joint ventures. PCCP continues to seek investment opportunities with proven operators seeking fast and reliable capital.
About Security Properties
Security Properties is a national real estate investment and operating company headquartered in Seattle, Washington. For more than 45 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 70,500 residential units exceeding $3.94 billion in cost. Security Properties maintains a focused multifamily strategy supported by integrated teams of professional acquisition, development, construction, investment and property management specialists.
Boston-Based Intercontinental Likes Napa
Natalie Dolce - National Executive Editor - GlobeSt.com
NAPA, CA—Intercontinental Real Estate Corporation a national real estate investment, development, and management firm headquartered in Boston has acquired Saratoga Downs Apartments in Napa, CA. This acquisition was led by Jessica Levin, director of acquisitions and Allen Logue, associate director of acquisitions.
Intercontinental acquired the property in a joint venture with Seattle-based Security Properties. Intercontinental Real Estate tells GlobeSt.com that the purchase amount was $58.5 million. We have also learned that Seth Siegel and Jason Parr of Cushman & Wakefield were the listing brokers for the property.
As GlobeSt.com reported in 2013, Ridge Capital Investors LLC and Redwood Real Estate Partners acquired the 124-unit apartment community along with Sheveland Ranch Townhomes for a combined price of $39.5 million.
Levin notes that “Saratoga Downs presents an opportunity to invest in a class A apartment and townhome community in the supply constrained Napa market. We believe the appealing unit mix featuring 54 larger recently constructed townhome units combined with the neighborhood’s strong demographic profile, nearby retail amenities and employment centers makes Saratoga Downs a great long term investment for our investors.”
According to Mark Hoyt, senior director of investments at Security Properties, several factors prompted the pursuit of this asset.
“The North Bay has been a target market for several years as cap rates are higher and supply is restricted compared to adjacent submarkets. It is extremely difficult to build new product in Napa evidenced by the fact only two market rate apartment properties have been delivered in the past decade with two more projected to be delivered in the next decade. The quality of the property is excellent and we are proud to include it in our portfolio.”
Saratoga Downs Apartments is a class A apartment community with 124 garden style apartments and 54 newly constructed townhomes. The property is located conveniently off of Highway 29 with quick access to Highway 12, Interstate 80, and Highway 101, offering a short commute for residents working in both the Napa Valley and Greater San Francisco Bay Area. Community amenities include a new clubhouse, state-of-the-art fitness center, barbeque and picnic area, playground, gazebo, bocce ball courts, fire pit, lounge and outdoor kitchen. Units consists of one-, two-, three- and four-bedroom floorplans as well as detached townhome configurations. The apartments include in unit washer/dryer, balcony, granite countertops, walk-in closets, and garages or covered parking.
With $39M apartment buy, Seattle investors continue their Portland push
Jon Bell - Staff Reporter - Portland Business Journal
A Seattle multifamily investment firm continued its march across the Portland metro region this week with the acquisition of a 243-unit apartment complex in Beaverton.
Security Properties, in a joint venture with PCCP LLC, has purchased Element 170 Apartments, a new construction, Class A, 243-unit multifamily property for $39 millionthrough its Security Properties Multifamily Fund II. The property is the latest of eight acquisitions in the fund.
HFO Investment Real Estate represented both Security Properties and the developer of Element 170, Metropolitan Land Group, in the transaction.
Element 170 Apartments was placed under contract in October 2013, began leasing in May of 2014, stabilized operations inJanuary 2015 and was acquired inFebruary 2015 by the joint venture. The location is immediately adjacent to the MAX Light Rail Station with access to downtown Portland and the airport. It is within two miles of the Nike World Headquarters and approximately five miles from the Intel campus.
"The property and the location are ideal, and we expect these factors to contribute to better-than-market revenue growth during our hold period," said Mark Hoyt, senior director of investments at Security Properties. "We were able to structure the purchase contract to lock in the price in the fourth quarter of 2013. This was an excellent outcome for our investors."
The 9.3-acre property consists of 10, four-story buildings and a leasing office/clubhouse building with amenities that include a pool, fitness center and conference room. The upgraded units offer custom cabinetry, in-unit washers and dryers, 9-foot ceilings and vaulted ceilings in all top floor units.
PCCP LLC is a real estate finance and investment management firm focused on commercial real estate debt and equity investments. It has approximately $6 billion in assets under management on behalf of institutional investors and has offices in New York,San Francisco and Los Angeles.
Security has been busy in Portland in recent years. In November, it broke ground on a four-building mixed-use development at North Williams Avenue and North Mason Street. It paid $11 million for the Honeyman Hardware Loft Apartments in the Pearl District in 2006, then sold them this past December for $37 million. Security also paid $34.3 million for three Beaverton apartment complexes in 2011 and $25.7 million for the Forest Creek Apartments in Portland in 2012.
In 2013, Security also purchased Block 136 in the Pearl District, which is the former home of the Pacific Northwest College of Art. PNCA moved into the historic former post office building at 511 N.W. Broadway in 2015.
Security is planning to build two buildings on Block 136: a 75-foot building with ground floor retail and either office or residential above and a 150-foot tower with retail at ground level and apartments above.
Security Properties wants to start Spring District housing next month
Nat Levy - Journal Staff Reporter - Daily Journal of Commerce
Security Properties is on track to start construction of the first housing project in the 36-acre Spring District in Bellevue within a month.
The developer is awaiting permits to build an underground parking garage that will be shared by five apartment buildings. Once that is done, Security Properties will start two apartment buildings.
The five buildings Security Properties is planning will range from three to nine stories and have a total of 305 units.
Michael Nanney of Security Properties said they will be built in phases and open one at a time, over about two years.
The developer is calling the five-building complex “sparc” because it will be the spark that sets off the Spring District. Sparc is also the name of an early microprocessor made by Sun Microsystems in the 1980s.
The team is the same for all five buildings. GGLO is the architect, and Walsh Construction Co. is the general contractor. Other members are Triad Associates, Bumgardner and Cary Kopczynski & Co.
Wright Runstad & Co. and Shorenstein Properties are developing the Spring District.
Security Properties could double down on the Spring District. It has an option to buy an 84,000-square-foot parcel east of sparc, and Security Properties estimates it could build up to 250 units on that site. The developer will set up a pre-application meeting with the city of Bellevue in a few weeks to begin planning that project.
Sparc will have 13,000 square feet of retail in one building. The space has been leased, but Security Properties did not name the tenant.
The sparc site is on the southwest corner of the Spring District, about 35 feet above the intersection of 120th Avenue Northeast and Northeast 12th Street. That elevation means every unit will have views of downtown Bellevue and Mount Rainier.
Nanney said at one of the first project meetings with the city in Bellevue City Hall, the team spotted the Safeway distribution center, which used to be on the site. Nanney said that was an “epiphany moment” when the team realized all the apartments would have great views.
There will be a hillclimb from the intersection to the apartment buildings. Staircases will have several levels of plazas leading to the main public plaza and apartment buildings. There will be a bike runnel on one side of the staircase, which allows people to push bikes up the steps. The other side will have stormwater filtration.
Apartments will be built on only about half of Security Properties' site. The rest will be open space, and construction is underway on a two-acre park in the district.
“It's going to be very inviting to come out of your unit and spend time on the site itself and meet people,” Nanney said.
There will also be a gym, rooftop lounge with a demonstration kitchen, resident WiFi cafe, and a bike club and repair center.
Security Properties' John Marasco said potential tenants could include tech employees — working at or near Microsoft — and medical employees working at Overlake Hospital Medical Center.
Security Properties has already done one project that targets medical professionals: Bridges@11th in the University District. The first units there are expected to open in May, and the complex is designed partially for employees of Seattle Children's and University of Washington School of Medicine. While planning that project, Security Properties asked employees what they wanted. That feedback lead Security Properties to add some three-bedroom units in the Spring District as well as more two-bedroom units and larger units in general.
Marasco has been tracking the Spring District for some time. He said he worked on an Urban Land Institute task force focused on the Bel-Red area, before zoning in the neighborhood was finalized.
Marasco said the neighborhood plan and the chance to work with Wright Runstad and Shorenstein Properties was what interested his firm.
“I liked it because it was a neighborhood being master planned very close to (downtown), that was going to include access to the light rail system, and that access is very limited on the Eastside.”
The $2.3 billion Spring District could have up to 5.3 million square feet of offices, retail, housing and parks.
Wright Runstad's first phase will be two office buildings totaling 491,120 square feet. NBBJ is designing the office buildings, and Howard S. Wright Cos. is the general contractor.
Design Perspectives: Angeline Apartments will feed Columbia City
Clair Enlow - Special to the Journal - Daily Journal of Commerce
Columbia City has a long history, but it has waited a long time for Angeline. Now a big package of sorely needed urban goods is being delivered, on a very tough site.
Security Properties is developing the mixed-use building between South Angeline and Edmunds Streets, just off Rainier Avenue South. It's anchored by a PCC Natural Markets grocery store with 193 apartments above.
Luckily, the project is not going to make this reviving neighborhood a different place. But it will be even more populated day and night — and more fun to walk around. When it opens in July, Angeline will give back to Columbia City with some new, semi-public streets.
Since the 1980s, signs of new life have been appearing along the streets of Columbia City: galleries, bookstores, bars and restaurants joined by a nonprofit bike shop and biodiesel co-op.
Columbia City Farmers Market, which has become a local institution, sets up outdoors on Wednesdays and attracts crowds from spring to fall. Sound Transit started light rail service along nearby MLK Way in 2009, and it stops at Columbia City Station, just a little more than two blocks from the old commercial center.
The stage was set in 1978, when Columbia City was anointed a historic district. That meant that any project proposed for the Angeline site had to satisfy a historic district review board.
And for decades, nothing did.
In the meantime, an old supermarket shell sat in the middle of a paved-over city block there — right next to a park, a Carnegie library and one of Seattle's intact streetcar-based commercial districts.
Security Properties purchased the site in 2011 from HAL Real Estate Investments, which had bought it in 2007. After lengthy reviews with community input, the landmarks board had rejected design proposals from HAL showing a 306-unit apartment complex wrapped around an interior court. The board was more receptive to Security Properties' proposal, which made the building very approachable from three sides.
The Angeline project was designed by Bumgardner, which also designed PCC's first supermarket-sized store in Fremont, part of a mixed-use project there called Epicenter.
At six stories, Epicenter and Angeline are each taller than their historic neighbors. But the five-floor residential part of Angeline is stepped back from the edge, and the tall walls are not parallel to the base. They shift direction, which makes for interesting views from all sides and from the many apartment balconies, and breaks up the bulk and scale.
Unfortunately, the character of the outer walls seems to shift abruptly with each corner, which makes the much-reviewed building look like it was designed by committee — which, in a way, it was.
Perhaps the biggest challenge to developing the site was an existing one-story corner bank with drive-through lanes and parking. The bank carves away about a third of the Angeline block, but it now faces 20-foot-high concrete party walls on two sides.
The good news is on top, where a long, broad deck above the 20-foot base of Angeline will support an urban farm similar to one that produces food for Bastille Cafe and Bar in Ballard, according to John Marasco of Security Properties, which owns the building in Ballard, too.
While the bank holds to its suburban-style corner lot, Angeline will offer an urban way around it all. With large setbacks on two sides, a new, street-like private drive extends the path of South Angeline Street (named after Chief Seattle's daughter) west from Rainier Avenue South, connecting with South Edmunds Street by turning north. The idea is to provide a wide-open pedestrian connection between Rainier Avenue South and the park.
But this is also a nice drive. There will be perpendicular parking on both sides of the South Angeline Street extension, which will slow traffic. Then it gets a little more fun.
The bending roadway passes beneath an overhanging corner of the building (and the entrance to below-grade parking). But there is plenty of room to shelter cars and pedestrians at the ground level, according to architect Mark Simpson of Bumgardner, who said the corner was inspired by Corbusier's Villa Savoye and other early Modern buildings.
Before joining up with South Edmunds Street, the driveway will pass a broad, stepped courtyard on the long side of the Angeline, one that is filled with tables and chairs, and managed by the full-service PCC.
Along with the balconies above, those tables will have a great view over the new woonerf-like, car-and-pedestrian street — and over Columbia Park, a sweeping greenway bordered by mature trees, craftsman-style houses and the historic library building.
The third side of the Angeline could mean the most to Columbia City. Around the corner on existing South Edmunds Street is where the loading docks for the super-sized PCC store will be. There, the back-of-store logistics of a supermarket meet a savvy urban neighborhood.
It's not an easy dance, according to Simpson. Pedestrians can't be jostled too much, but business can't be disrupted, either.
But there's even more going on along this side. Columbia City Farmers Market has been setting up in a closed-off South Edmunds Street in season. And according to PCC CEO Cate Hardy, the natural food store is committed to doing its best to support the ongoing life of the outdoor farmers market through cross-marketing and other strategies that promote local growers.
The mix of regular traffic, delivery trucks large and small — along with stalls and booths on market days — will test these new relationships. Success is likely to be a matter of careful delivery timing — and true commitment by PCC.
But to make the loading area more hospitable to pedestrians as well as store personnel, the architect has designed a special canopy over the docks and sidewalk. It's just one more move in this dance.
Security Properties Finds TOD Value Along D.C.’s Silver Line Expansion
Ashburn, Va.—Security Properties has completed its first acquisition in the Northern Virginia/Washington D.C. area with the purchase of The Grove at Flynn’s Crossing. A location three blocks from the Metrorail’s Silver Line Phase 2 expansion certainly played heavily into the transaction. The 168-unit community will be served by the Route 772 Station—the western terminus of the line—which has an estimated completion date in 2018.
Security Properties dropped $31 million on the acquisition, according to data from Yardi Matrix. Aspen Square Management was the seller. Aspen picked up the asset back in December 2012 for $18.1 million. The asset features a mix of one, two and three-bedroom apartments. Amenities include a fitness center, clubhouse, pool and playground. In typical Security Properties fashion, the new owner will invest capital for improvements to both the interior and exterior of the property.
“This was a strategic acquisition for the company, as we plan this to be the first of many acquisitions in the Northern Virginia/Washington DC market,” says Bryon Gongaware, managing director of affordable housing for Security Properties.
Security Properties CFO wins 2015 CFO of the Year
Puget Sound Business Journal
The Puget Sound Business Journal's CFO of the Year Awards are presented to financial professionals in Washington for outstanding performance in their roles as corporate financial stewards.
See below for a list of 2015 honorees.
This program highlights the importance of financial executives in the region. CEOs often are credited with their companies’ successes. They are the faces and voices of the business. However, in many cases, they wouldn't have arrived at that point without the strategic guidance of their CFOs. Chief financial officers must be fearless financial strategists and provide guidance and sound advice to their CEOs and board directors in order to realize their CEOs’ visions.
We honor the region’s top financial executives via our annual CFO of the Year Awards program because of the role the CFOs play in the success of their companies and in the growth of the Puget Sound region's economy. Each winner is also profiled in a Puget Sound Business Journal special report.
Join us for The 2015 CFO of the Year Awards on June 4th and meet this year's winners!
Congratulations 2015 CFO of the Year Honorees!
Nonprofit Organization (with less than $50 million in revenue):
- Jean Ingebritsen, Big Brothers Big Sister of Puget Sound
Private Company (with less than $100 million in revenue):
- Mark Klebanoff, PayScale Inc.
Private Company (with between $101 million and $500 million in revenue):
- Bob Krokower, Security Properties
Private Company (with more than $500 million in revenue):
- Chrissy Yamada, EvergreenHealth
Public Company (with less than $1 billion in revenue):
- Clint Stein, Columbia Bank
Public Company (with more than $1 billion in revenue):
- Brandon Pedersen, Alaska Air Group Inc.
- Margaret Meister, Symetra Financial Corp.
CFO of the year: Bob Krokower manages the risk in real estate at Security
Marc Stiles - Staff Writer - Puget Sound Business Journal
Bob Krokower not only knows numbers, he knows people, too.
These traits have earned the CFO of Security Properties, a Seattle-based national investor and developer of apartments, high praise from his colleagues.
Company President Tim Overland said Krokower’s financial stewardship is unparalleled. Having someone like that in charge of the books is vital for any company, but it’s particularly important for companies in real estate, which is an especially capital-intensive business.
Currently, Security has approximately $350 million of apartment development in process, and has closed around $200 million in conventional multifamily acquisition so far this year. In addition, Security’s “affordable housing pipeline has been as robust as it has ever been,” Overland said.
He added the company has been able to do this, in part, because Krokower has cultivated new lender relationships while nurturing existing ones with national and local banks, including KeyBank, Compass Bank, PNC, Umpqua and HomeStreet.
In 2014, Krokower helped improve the controls of Secrurity Property’s new property management company startup, Madrona Ridge Residential. That company has grown from zero to nearly 300 employees during the last three years. His colleagues say he takes a hands-on approach to continue to improve controls, in what is a very dynamic, people-based business.
Krokower not only leads as CFO, he also has been on the forefront of a critical personnel decision. Last year, John Orehek, Security’s longtime CEO and president, retired. Security Properties officials said Krokower was the first in line to help shepherd the ensuing transition, with two Security employees, David Dufenhorst and Overland, becoming CEO and president, respectively.
With the real estate market soaring, it’s an exciting time to be in the business. Krokower said the trick is managing this exuberance to protect the company from the next downturn is his biggest challenge.
“I have been through a lot of real estate cycles, and I know something is going to happen. You have to anticipate (the slowdown) and plan for it,” he said. It’s all about “managing your risk without hobbling the company.”
Krokower’s is an up-from-the-bottom story. He was working loading trucks for a retailer and studying accounting at California State University, Northridge, when he landed a spot in the company’s accounting department as a bookkeeper. He wasn’t aiming to become the CFO of a major real estate company when he entered the world of finance as a young man.
“I wanted a living. I like numbers. Accounting just sounded like a good way to go,” Krokower said.
He wound up working as a senior vice president for a California real estate investment company, and real estate is the path he continued to follow. He moved to the Northwest in the early 1990s, eventually becoming CFO for Seattle-based Harbor Properties (now Mack Urban). He joined Security Properties as CFO in 2003.
Krokower stays on top of Security Properties’ finances even though he’s up for an hour in the middle of most nights taking care of his family’s seven dogs.
“It’s crazy,” said Krokower of his nighttime routine of releasing the pups – and carrying some of the older ones out – to relieve themselves, and then feeding them. “You’ve got to be nuts.”
And on weekends, he’s often on the road transporting dogs hundreds of miles as part of his wife Fay’s dog-rescue nonprofit, Ferry Dog Mothers. “I call it a mitzvah – a good deed.”
Get to know Bob Krokower
Born: Los Angeles
Raised: Los Angeles
Education: Bachelor’s in accounting, California State University, Northridge, 1963-1968,
Career: Senior auditor, Arthur Andersen, 1968-1972; Controller, Donald L Bren Co., 1972-1978; senior vice president finance and administration, Donald L. Bren Co., 1978-1992
Civic: My wife and I operate a nonprofit dog rescue, Ferry Dog Mothers.
Growing up you wanted to be: I don’t know
First dollar: Mowing lawns
Most proud of in 2014: Facilitating a change in senior management with lenders and stakeholders.
Best thing about your job: Mentoring and teaching younger associates
This would surprise people about you: I am an open book, there should be no surprises.
If you had to choose another career, you would be: Teaching
Next big thing (business): At this stage in my life, it is just to keep on doing what I have been doing.
Next big thing (personal): Just to spend a lot of time with the family
In your spare time you like to: Spend time with the kids and grandkids, dinners with my wife and transporting dogs.
Thing they didn’t teach you in business school that you needed to know to be a great CFO: Never burn a bridge, you run across people in your field over and over again.
Best lesson from a mentor: While in college I worked for John Jamalian who was controller of a retail chain. He taught me the importance of maintaining positive relationships.
Spring District apartments starting
Journal Staff - Daily Journal of Commerce
Security Properties broke ground this week on its first two apartment buildings in the 36-acre Spring District in Bellevue.
They will have a total of 79 units, and should open late next year or in early 2017.
Security Properties is planning five buildings in all, with a total of 309 units and 305 parking spaces.
They will range from three to nine stories and be built in phases, with units opening over about two years. This image shows the largest building: a nine-story, 100-unit structure due to open in mid 2017.
The developer calls the five-building complex Sparc, and says it will be the spark that sets off the Spring District. Sparc is also the name of an early microprocessor made by Sun Microsystems in the 1980s.
Sparc will have about 14,000 square feet of retail. The space has been leased, Security Properties said, but it did not name the tenant.
Security Properties has an option to buy an 84,000-square-foot parcel in the Spring District east of Sparc where it could build another 250 units.
Sparc will occupy about half of Security Properties' land and the rest will be open space.
Construction also is underway on a two-acre park in the district.
John Marasco of Security Properties said in a press release, “While the architecture is edgy and urban, spectacular mountain and lake views and significant open spaces will help people build community and enjoy the outdoors.”
Amenities in Sparc will include a gym; rooftop lounge with a demonstration kitchen, outdoor deck and putting green; a WiFi cafe for residents; and a bike club and repair center.
There will be a hillclimb linking the apartments to the intersection of 120th Avenue Northeast and Northeast 12th Street. Stairways will have several plazas leading to the main public plaza and the apartments. A bike runnel on one side of the stairway will allow people to push bikes up the steps. The other side of the steps will have stormwater filtration.
USAA Real Estate Co. is Security Properties' equity partner. This project is Security Properties' first with USAA and its first on the Eastside.
The team is the same for all five buildings. GGLO is the architect, and Walsh Construction Co. is the general contractor. Other members are Triad Associates, Bumgardner, Cary Kopczynski & Co., Madrona Ridge Residential and Urban Relations.
Wright Runstad & Co. and Shorenstein Properties are developing the Spring District. The $2.3 billion neighborhood will be built around a future Sound Transit light rail station and could have up to 5.3 million square feet of offices, retail, housing and parks.
What if they built a 40-story tower in Seattle and no one noticed?
Marc Stiles - Staff Writer - Puget Sound Business Journal
Security Properties this spring started construction of a downtown Seattle high-rise with no hoopla, but unlike the quiet launch the uniquely shaped building itself will stand out on the skyline.
The 40-story apartment project at 1823 Minor Ave., is called Kinects and gets progressively larger on each floor. The result will be a kind-of wedge-shaped building that's topped by a rooftop swimming pool.
That construction of such a big project could start with little notice indicates how much building activity is occurring in this part of the city called the Denny Triangle. It's where Amazon (Nasdaq: AMZN) is building its high-rise campus and other developers are under way on big projects. (See the map in the slideshow section of this post.)
Seattle architecture firm Bumgardner designed the 357-unit project, and CKC of Bellevue is the structural engineer. Andersen Construction is building Kinects.
The structural design is the key, according to Security Properties. The team took what a Security representative said was the unusual step of having the structure formally peer reviewed. Without that, the tower would have been required to have redundant structures and beams, and that would have compromised the design.
Also unusual, at least in Seattle, is the pool. "We do not know of any other tower-top pools other than at the Four Seasons Hotel, and we need to note that theirs is actually a one-season pool, whereas ours – enclosed and lit – will be a truly four-season pool," said John Marasco, Security Properties' chief development officer.
The Kinects name refers to the location of the property. The Denny Triangle is at the nexus of Capitol Hill, South Lake Union and downtown, said Marasco, who's not concerned that several similar-sized projects have been built nearby or are planned.
Marasco said people are still renting apartments in high-rises, and that the pool and other amenities will help give Kinects an edge.
Plus, he said, the city's new pending "linkage fee," or tax on real estate development, will significantly constrain the supply of new apartments.
Security Properties is developing Kinects on land that some members of the Bartell Drugs family own, and the total development cost is around $150 million, according to Security officials. Insurance company Pacific Life is providing the construction financing, the the State Teachers Retirement System of Ohio is the equity partner on the project.
The tower is scheduled to be done in the summer of 2017.
Concentrated construction: Two big projects are rising on same Denny Triangle block
Marc Stiles - Staff Writer - Pudget Sound Business Journal
There’s no shortage of places in the Puget Sound region where extraordinary amounts of construction are occurring, but one block in the Denny Triangle area of downtown Seattle is particularly busy.
Construction started this month on a large mixed-use project called Tilt49, which will have a 37-story apartment tower with 410 units and an 11-story office building. A Seattle company, Touchstone, put the Tilt49 project together, and is developing the office building, which will have 300,000 square feet of space. Mortenson Development and AMLI Residential are developing the apartment tower. More about Tilt49 is at bizj.us/1hqcr3
Tilt49 shares the block with a uniquely designed 40-story, 357-unit apartment tower called Kinects. Security Properties is developing the building, which gets progressively larger on each floor the higher up you go, creating a wedge shape. Bumgardner is the architect, and CKC is the structural engineer. More about Kinects is at bizj.us/1ht34r.
Both Touchstone and Security Properties have cited the Denny Triangle location as a driver of their projects.
Security Properties Chief Development Officer John Marasco said the Kinects name “says it all” because the triangle is at the nexus of Capitol Hill, South Lake Union and downtown, where the Westlake transit hub is half a mile away.
It is a natural development area, he said, given its proximity to downtown and great access to transportation alternatives.
Bellevue's mega Spring District lands Microsoft/UW venture GIX as first major tenant
Marc Stiles and Jacob Demmitt - Staff Writers - Puget Sound Business Journal
Among the biggest winners of the decision to site the Global Innovation Exchange, or GIX, in Bellevue are two Seattle firms: Wright Runstad & Co., and Security Properties.
Wright Runstad, in conjunction with Shorenstein Properties of San Francisco, is developing the 36-acre Spring District, a mixed-use development that will be GIX's permanent home. Security Properties is developing a 309-unit apartment project in the district east of Interstate 405 in the Bel-Red corridor, and now plans to start building the second phase with more than 275 units in the summer of 2016, Security President Tim Overland said Thursday.
Initially, GIX will be housed in roughly 100,000 square feet in one office tower, according to Wright Runstad President Greg Johnson, who expects the international tech training institute to expand over time. He added the first building will be done within 18 to 24 months, allowing GIX to open in the Spring District in 2017.
The decision to put GIX in the $2.3 billion Spring District is a godsend for the project with an audacious goal: turn an industrial area into a walkable, urban neighborhood of office towers, residential buildings, parks and a light-rail stop. Wright Runstad aspires to make its project to Portland's Pearl District, formerly a warehouse district that's now an urban oasis of housing and commercial buildings.
Construction of The Spring District's streets and other infrastructure began last year, and Security Properties started building the first phase of the apartments earlier this month.
Now the district has its first big technology tenant: GIX, a Microsoft (Nasdaq: MFST)-supported project that the University of Washington is jointly establishing with Tsinghua University of China. Within a decade, the project partners expect that more than 3,000 students will be studying at GIX.
"I clearly do think that GIX will help be a launching pad for all this new development," Microsoft General Counsel Brad Smith said Thursday.
Having a stop along the future light-rail line that will run from near Microsoft's headquarters in Redmond to Seattle was important in the siting decision, Smith added. In Seattle, riders will be able to transfer to trains that will run to the UW. The Seattle-to-Redmond line is scheduled to open in 2023, and next year a station on the UW's campus will open.
Connecting the UW with GIX will be "hugely helpful," Smith said, adding the GIX team needed a place with ample land. Ten years ago, the campus likely would have been built in Seattle's South Lake Union, but today there's no parcel large enough.
"I think one of the things that’s not yet completely appreciated in our region is just what a unique opportunity the Bel-Red corridor offers," Smith said. "Here is an area of land that’s larger than Central Park in New York that has been completely rezoned for development. Yet it is also land that is connected to technology corridors and is part of a thriving metropolitan area."
He said it became clear "fairly quickly that the Bel-Red corridor was the Bel-Red corridor was a good place to look.”
He added that GIX chose the Spring District due to "the sterling reputation of Wright Runstad," which has close ties to the UW and Microsoft. The UW's real estate school is named for Wright Runstad co-founder and CEO Jon Runstad and his wife Judy Runstad, an attorney, and Wright Runstad developed Microsoft's headquarters.
DEAL OF THE DAY: Location Proves Key in Latest Security Properties Buy
Mike Ratliff - Senior Associate Editor - MultiHousingNews Online
Henderson, Nev.—A 2007-built Class A asset in Henderson, Nev., has changed hands. Seattle-based Security Properties grabbed Verona Apartment Homes for $40 million. The 275-unit purchase represents the firm’s second purchase in the Las Vegas market via its Multifamily Fund II. The asset was sold by its developer, Ovation.
“The area offers an opportunity for growth not just in the traditional sectors like gaming and hospitality, but also in newer industries like medical and data centers,” said Davis Vaugh, investment manager at Security Properties. “Given the proximity to Union Village, which we believe will be transformative for both Henderson and the Las Vegas metropolitan area, we look forward to being active in Las Vegas for years to come.”
Location, as it tends to do, played a big role in the purchase. The asset is located close to the Galleria Mall and I-515, and is adjacent to Union Village, a $1.2 billion, 155-acre master-planned mixed-use project that is under construction.
It should come as no surprise that a value-add plan is in play. Security Properties has plans to update the exterior, clubhouse and amenity spaces in the near term. A light renovation of unit interiors will follow. There is no word on current occupancy, but Yardi Matrix data show average rents in the $1,050 range. Amenities at the property include a fitness center, clubhouse, swimming pool, spa and covered parking.
Mission Unaffordable: Here's why housing in Seattle will stay out-of-reach
Marc Stiles - Staff Writer - Puget Sound Business Journal
From his downtown Seattle office, Stephen Whyte runs 93 low-income housing complexes across the nation.
Whyte should be a key player in solving what Seattle Mayor Ed Murray calls “our worst housing affordability crisis in decades.”
All of Whyte’s expertise at tapping tax credits and taming costs melts away in the blistering-hot Seattle property market. Of the eight projects his company, Vitus, bought and rehabbed last year, none was in Washington state.
“Seattle is an ultra-expensive market right now,” Whyte said. “It’s very difficult to find (low-income) projects that work.”
Time spent with people like Whyte — the experts who actually create and manage housing for people with modest incomes — shows that overwhelming economic forces are conspiring to sweep aside the mayor’s dream of building a city affordable to all of its workers.
According to Zillow, the Seattle median home value of $507,600 is projected to rise 7.3 percent in the next year. The median rent is $1,825.
Even if all 65 recommendations of Murray’s affordable housing task force were put into action — including the upzones, developer fees and doubling the housing levy to $290 million — it likely would only marginally boost the supply of affordable dwellings to the people who brew Seattle’s lattes, tend its sick and clean its offices.
“Unfortunately in Seattle, that’s where (doing affordable housing) gets very difficult,” said Bryon Gongaware, managing director of the affordable housing division at Security Properties, another Seattle developer that finds itself stymied in its home town.
Bellevue-based DevCo, yet another low-income developer, is building 516 units in Federal Way and will break ground soon on a 261-unit property in Kent.
But DevCo hasn’t built in Seattle.
It can’t compete against the market-rate builders paying top dollar for development sites, said company President Jack Hunden.
Security Properties, like Vitus and DevCo, makes money by building and operating low-income units — about 7,400 such units around the nation.
But what does today’s economic reality enable Security to do in Seattle? It’s building a 40-story luxury tower with a rooftop pool.
Competition at bay
Some people might be surprised at one thing that Vitus, Security Properties and DevCo have in common beyond their low-income housing portfolios: they make money on them.
While most people associate affordable housing with nonprofit organizations, such as Capitol Hill Housing and Bellwether Housing, the industry also includes plenty of for-profit companies. In fact, the for-profits and nonprofits often team up on projects.
Together, they amount to a $2.6 billion-a-year industry in King County, employing 14,600 people directly and indirectly.
It’s a complex, regulation-driven business, but not as risky as that sounds because demand for affordable housing is insatiable, said Tim Overland, president of Security Properties.
And surprisingly, he added, the return on investment can be higher than on market-rate deals.
Given that potential, why aren’t more private companies building affordable housing?
“It’s complicated, it’s niche-y — and most institutional capital partners don’t get it and aren’t interested in buying it,” said Overland. Of Security’s 15,400 total apartments, just under half are in its affordable-housing portfolio.
This hybrid approach is intentional, with the affordable-housing business serving as a counterbalance to buying and building market-rate housing. Market housing tends to be more cyclical and volatile, Overland said, “whereas affordable housing is very stable from a cash-flow perspective.”
Building and managing affordable housing isn’t without risk. Like a conventional apartment project, affordable ones have to be built on time and on budget. The properties must be managed so employees and investors can be paid.
And the developer has to comply with myriad regulations. Failure could result in the government taking back tax credits that were used to fund the project, and the developer would be on the hook for that plus interest and penalties.
This can be scary. But for a company like Security, which has a team dedicated to compliance issues, it’s a good thing, said Gongaware.
“I like that scary factor,” he said, “because it reduces the buyer pool and allows us to be more competitive for (affordable housing) transactions.”
Where the jobs are
At Vitus, Whyte looks north from his downtown office window and sees a forest of buildings rising up for the ever-expanding Amazon.com.
He’s looking at the challenge. Amazon is a Pied Piper for 24,000 highly paid employees in Seattle, people whose ability to pay for close-in homes and apartments has helped drive Seattle prices up 11 percent in the past year, according to Zillow.
Affordable housing developers like Vitus are caught between powerful forces that limit their ability to turn on the spigot of supply just because politicians like Murray say it’s needed.
Thirteen years ago, Vitus bought a 332-unit low-income property in White Center. Whyte doesn’t think he could do that today because the real estate market “is so overheated now.”
Vitus does have 33 properties in Washington, but most are in rural areas, such as Darrington in Snohomish County and Toppenish in Yakima County.
The experiences of developers like Vitus, DevCo and Security show why significantly expanding the supply of low-priced dwellings in a superheated real-estate market may turn out to be mission impossible.
Developer scores big payday without building a thing
Alby Gallun - Staff Reporter - Chicago Business
A River West property has sold for nearly $17 million, a deal that shows how developers can sometimes pocket a big profit without building anything.
Security Properties, a Seattle-based developer, has flipped the Gonnella Baking site at 1001 W. Chicago Ave. for $16.8 million just six months after buying it for $7.8 million, according to Cook County property records. Security sold the parcel to Bond Cos., a Chicago-based developer that plans to build a 363-unit apartment building there.
Land prices in the city have soared as developers have gobbled up properties for new residential towers, creating flipping opportunities for speculators. But the Gonnella site more than doubled in value largely because Security persuaded city officials to rezone it for a big residential project.
Bond plans to pick up where Security left off. Robert Bond, the company's co-founder and president, said he expects to have the project's construction financing in place within 45 days and break ground in first-quarter 2016. The developer has retained Security's architect, Chicago-based FitzGerald Associates Architects, which designed two buildings of 14 and 15 stories on the property.
The developer plans to tweak the design and add some amenities to attract millennial renters, according to Bond, who said it's too early to discuss details.
"We will have a project that's uniquely designed to meet the market segment we want to reach,” he said.
Bond expects to complete the development in 2017. He declined to say how much it would cost to build.
HEFTY RETURN WITHOUT ADDED RISK
However the project turns out, the property was successful investment for Security, allowing the developer to generate a hefty return without taking on the additional risk associated with a big development.
Some observers may see that as a wise move. The risks for apartment developers are growing these days amid a construction boom that's expected to add more than 7,500 units to the downtown market over the next couple years. But Bond isn't worried about a glut, saying demand will be strong enough to absorb the extra supply.
Though Security sold the property for a big gain, the developer did have to incur some major costs to cash out for so much more than it paid. It likely paid large sums to FitzGerald to design its project and to the attorneys it hired to manage the rezoning process. Though Security agreed to buy the parcel more than two years ago, it didn't close on the acquisition until it secured the new zoning.
The property's value also may have benefited from new affordable housing regulations that go into effect this month. Developers are more willing to pay up for land with residential zoning in place because those that apply for zoning changes now must follow the new rules, boosting their costs and depressing the value of their land, said Chicago developer Steven Fifield, who bid on the Gonnella site.
Bond said he pursued the property because it's in an up-and-coming walkable neighborhood with good transportation options, along Milwaukee Avenue's “Hipster Highway” and close to a CTA Blue Line stop and the Kennedy Expressway. Several other apartment developments are in the works nearby, including a proposed 190-unit building about a block west and a 227-unit projectunder construction at 500 N. Milwaukee Ave.
The Bond project also includes more than 30,000 square feet of retail space. Bond aims to lease some of the space to a grocery store. If he succeeds, “this will be a great anchor for the neighborhood,” said Fifield, chairman and CEO of Fifield Cos.
Best known in Chicago as a retail developer, Bond recently built the Maxwell, a 230,000-square-foot shopping center in the South Loop. The firm also is getting ready to break ground on Kildeer Village Square, a 180,00-square-foot shopping center in northwest suburban Kildeer next to a completed Bond project anchored by a Whole Foods Market, Bond said.
Though Bond hasn't developed apartments in Chicago, it has multifamily projects in the works in Charlotte, N.C., and Los Angeles, he said.
Security Properties Multifamily Fund Acquires 539-Unit Apartment Community in Scottsdale, Arizona
SCOTTSDALE, AZ - Security Properties and Intercontinental Real Estate Corporation purchased Pillar at Scottsdale, a 539-unit, Class A multifamily property located in Scottsdale, AZ, for $95,750,000. The asset was purchased through Security Properties Multifamily Fund II in its second joint venture with Intercontinental and their US REIF Fund. It is Fund II's second purchase in the Phoenix market and the 11th asset overall. This is the 89th asset in the Intercontinental Fund.
The subject is a high quality, core-plus Class A project that was built in 1999. Almost ½ of the units are townhome style plus ¾ of all units feature direct access garages. The location is outstanding as it is across the street from the TPC Scottsdale golf course and the Five Diamond Fairmont Princess Resort. To the west is the Reach 11 Recreational Preserve which is a 1,500 acre park with 18 miles of hiking trails as well as a large sports complex. To the south is the high-end shopping destination for Scottsdale with retailers that include an Apple Store, Nike Store, Lululemon and Forever 21. Trader Joe's is in the center caddy corner to the subject and Whole Foods is less than one mile north.
There are multiple employment drivers in the immediate vicinity including the Mayo Clinic two miles east. The clinic is opening a new $314M cancer center in 2016 that will create 1,000 new jobs. Adjacent to the Mayo Clinic is the American Express campus with 3,000 jobs. Additional blue-chip companies with large presences in the area include Prudential, Vanguard, JP Morgan Chase, Starwood, and Scottsdale Healthcare.
Because of the strength of this location, there is a value-add component of this acquisition as all units feature original interiors. The interiors will be updated and the exterior and amenity space will also be upgraded to be consistent with the new interiors. The end product will have a great market position because it will still be priced below new construction, but be able to offer direct access garages and townhome units that most of the competition does not have, plus offer a comprehensive amenity package that includes one of the top pool areas in the market.
David Dufenhorst, CEO of Security Properties says Fund II acquired this property because, "this was a rare opportunity to apply our proven value-add expertise to a unique asset with an A+ location. We are excited about the employment drivers in the area and firmly believe in the long-term viability of the townhome-style product. We think our renovation program will create value for our investors by producing a core asset well below replacement cost."
According to Jessica Levin, Director of Acquisitions for Intercontinental, "Phoenix is a dynamic market and Scottsdale is the most desirable location within the metro. With premier access to amenities, a location on Scottsdale Road, and high quality construction, this asset offers everything we look for in an investment. This unique combination makes Pillar at Scottsdale a fantastic long term investment for our investors."
Security Properties plans more apartments in this Bellevue neighborhood
Becky Monk - Special Projects Editor - Puget Sound Business Journal
Security Properties is doubling down on one Bellevue neighborhood.
The Seattle developer hasn't completed phase one of a set of apartments in Bellevue's long-planned Spring District, a $2.3 billion mixed-use project in what was an industrial neighborhood in Bellevue. Now it's submitted plans with the city of Bellevue for the second phase of construction, which consists of three building with 279 apartments.
Security President Tim Overland told the Business Journal in June it planned to move forward with the project.
Security broke ground in June on phase one. The Sparc is made up of five-buildings with 309 residences and 14,000 square feet of commercial space.
The Spring District projects represent the first time that Security has developed a new mixed-use project on the Eastside.
“We are right at the front of the Spring District,” Michael Nanney, Security's director of multi-family development, told the Daily Journal of Commerce. “My belief is as the Spring District becomes the next great neighborhood in Bellevue, we will see increased building heights.”
Wright Runstad, in conjunction with Shorenstein Properties of San Francisco, is developing the 36-acre Spring District east of Interstate 405 in the Bel-Red corridor. Earlier this year, the district landed its first big technology tenant: GIX, a Microsoft-supported project that the University of Washington is jointly establishing with Tsinghua University of China. Within a decade, the project partners expect that more than 3,000 students will be studying at GIX.
Nanney said Security will permit each of the three buildings in the second phase of the project separately. GGLO was the architect for phase one. Mithun was tapped to design the second phase.
Angeline opens in Columbia City
Journal Staff - Daily Journal of Commerce
Apartments in the Angeline are nearly finished, and ready to be leased.
Security Properties developed the mixed-use building between South Angeline and Edmunds Streets, just off Rainier Avenue South. The site is at the edge of the Columbia City historic district, on what was once a surface parking lot.
The 193 units sit above a 25,000-square-foot PCC grocery store that opened in July, and another 5,000 square feet of retail.
Bumgardner designed the building. Deacon is the general contractor.
The design is intended to extend the style of the historic district's buildings and streets to Columbia City Park. The southeast side reflects the older buildings' brick facades. The exterior has a more modern look to the north, facing the park.
Two new streets — Park Drive South and South Angeline Street — are designed to function as woonerfs, and give pedestrians priority over cars.
The Angeline has 223 parking stalls on two below-grade levels.
Residents can use a bike club, fitness room, theater, sixth-floor lounge, dog-wash facilities and a roof-top terrace with P-patches.
On the second floor will be an urban farm, providing fresh produce for the deli.
Other members of the design team include: RDH, building envelop and energy consultant; KPFF, civil engineer; SSA Acoustics, acoustical engineer; SSF, structural engineer; GGLO, landscape design; LightWire, exterior lighting; and GeoEngineers, geotechnical advisor.
Artwork was done by Kim Hall, Anna Sher and Chris Daly.
Multifamily Goes for Nearly Nine Figures
Lisa Brown - San Francisco Editor - GlobeSt.com
SCOTTSDALE, AZ—Pillar at Scottsdale, a 539-unit, class-A multifamily property with 539 units located at 17212 North Scottsdale Rd., sold for nearly $96 million or $177,644 per unit. The asset was purchased through Seattle-based Security Properties Multifamily Fund II in its second joint venture with Boston-based Intercontinental Real Estate and its US REIF Fund. It is Fund II's second purchase in the Phoenix market and the 11th asset overall. This is the 89th asset in the Intercontinental Fund.
Davis Vaughn, investment manager/acquisitions with Security Properties tells GlobeSt.com: "We purchased Pillar at Scottsdale because of the A+ location in North Scottsdale, and the unique product type. This was a rare opportunity to buy in Scottsdale, the highest rent submarket of the Phoenix metro, in a location with immediate access to retail amenities and jobs. We were also attracted to the unit mix as nearly 50% of the units are townhome-style and 75% of all units have direct-access garages. There is a significant value-add opportunity to renovate the units as most new construction has a much smaller percentage of these types of units and so we feel the market for them is being underserved. With a basis well below replacement cost and a bulletproof location, we hope to create long-term value for the investors in our Multifamily Fund II."
The subject was built in 1999 and was 96% occupied at the time of sale. The location is across the street from the TPC Scottsdale golf course and the five diamond Fairmont Princess Resort. To the west is the Reach 11 Recreational Preserve which is a 1,500-acre park with 18 miles of hiking trails as well as a large sports complex.
It is located in the Scottsdale Airpark submarket, putting it within a 5-mile radius of 142,000 jobs and some of the Valley’s most notable corporate employers including the Mayo Clinic. The clinic is opening a new $314 million cancer center in 2016 that will create 1,000 new jobs. Adjacent to the Mayo Clinic is the American Express campus with 3,000 jobs. Additional blue-chip companies with large presences in the area include Prudential, Vanguard, JP Morgan Chase, Starwoodand Scottsdale Healthcare.
Pillar at Scottsdale is surrounded by a number of high-end retail, dining and entertainment venues including Kierland Commons and Scottsdale Quarter. These two premier mixed-use developments in North Scottsdale are located just 1 mile from the community with retailers such as the Apple store, the Nike store, Lululemon and Forever 21. Trader Joe's is in the center diagonal to the subject and Whole Foods is less than 1 mile north.
The interiors will be updated and the exterior and amenity space will also be upgraded to be consistent with the new interiors. The end product will be priced below new construction, but be able to offer direct access garages and townhome units that most of the competition does not have, plus a comprehensive amenity package that includes one of the top pool areas in the market, an in-door basketball court and fitness center.
Tyler Anderson, Sean Cunningham, Asher Gunter and Matt Pesch with CBRE’s Phoenix office negotiated the transaction.
‘Peloton’ apartments on Williams-Vancouver corridor take inspiration from cycling
Jonathan Maus - Editor - Bikeportland.org
What is it about bicycles that inspires Portland’s residential real estate developers? First there was Milano, then Velomor, and now there’s the Peloton Apartments.
“Our apartment project caters to the biking community.”
— Gus Baum, Security Properties
Saturday night while biking by the construction site on the block bordered by North Williams, Skidmore, Vancouver and Mason I noticed a new banner. I had to pull over and stop when I saw the word “peloton” and the sign with a design that included dozens of cute little bikes.
Just last week I was talking with our news editor Michael Andersen about how bicycles are such a common symbol in many of Portland’s recent apartment and condominium projects. If not in the name of the building itself, bicycle-inspired graphics can often be found on the signage and exterior decor of many of the new buildings sprouting up on Portland’s skyline.
It’s not surprising that bicycles figure into developers’ plans. After all, bicycling is arguably the most well-known brand attribute of Portland these days (with craft beer and the food scene rounding out the top three). Heck, even out-of-town sportswriters find ways to mention bicycling in completely unrelated stories.
In the case of the Peloton Apartments, the developer of the 268-unit project says inspiration for the name came from being located on Portland’s busiest bicycle corridor.
Gus Baum of Security Properties shared with us via email this morning that, “Since inception, the Peloton site was focused on taking inspiration from the unique community on N. Williams, and in particular the bike gateway to the city via Vancouver headed south and Williams headed north.”
“Literally hundreds of avid bicycle enthusiasts,” Baum continued, “from commuters to casual riders use the thoroughfares to navigate to north and northeast Portland every day. We wanted our multi-family apartment project to embrace not just the two major streets surrounding our project but to bike culture in Portland overall.”
Bicycles on the marketing banner.The new buildings are going up across the street from the First AME Zion Church, providing a sharp contrast with the corridor’s past.
What’s more, Baum says the color schemes of some units were inspired by a popular racing bike and some doors in the project will match the color of vintage yellow jerseys from the Tour de France.
The word peloton comes from the French “platoon” and today is used to refer to the main group of riders in a bicycle race. Baum is likely unaware of the irony of using a name from competitve cycling for a building on streets where high-speed bicycle riding — also known as “Cat 6” or “hipster racing” according to the Urban Dictionary — is rampant and often ridiculed.
Thankfully bicycling will be more than just part of the origin story at Peloton Apartments. As we reported last year, the four-building development will include a “pedestrian-focused” woonerf space. Baum says bike-loving residents of the Peloton will also enjoy 275 bike parking stalls, a bike club, and “numerous connections to Portland’s bike community through artwork, branding and other gestures.”
The banners visible today on the fence around the construction site are part of that branding effort. They were designed by Portland-based OMFG Co.
The Peloton Apartments are just the latest in the ongoing transformation of North Williams Avenue. What used to be a place that housed half of Portland’s black residents has changed drastically in the past decade and bicycles and the people who ride them have been at the forefront of that change.
Bridges@11th designed to make residents and environment healthier
Journal Staff - Daily Journal of Commerce
Bridges@11th, a new apartment complex in the University District, has earned LEED silver certification from the U.S. Green Building Council.
Security Properties developed the project at 4557 11th Ave. N.E. It was completed in August.
GGLO was the architect and landscape architect. The team also included Bumgardner Architects, interior designer; Walsh Construction Co., general contractor; and Swenson Say Faget, structural engineer.
Bridges has three buildings — eight, seven and five stories — connected by passageways and skybridges.
There are 82 studio and open-one-bedroom units; 24 one-bedrooms; 12 loft one-bedrooms; 58 two-bedrooms; and eight three-bedrooms.
The complex also has 1,300 square feet of retail as well as community spaces and 125 parking stalls.
A rooftop deck is on one building and a pedestrian-oriented street called a woonerf separates two buildings.
Landscaping uses native, adaptive and drought-tolerant plants to help keep potential pollutants from storm drains.
GGLO said the skybridges allow access to the rooftop deck. One building would have needed a second internal stairway if it didn't have a skybridge.
Bridges@11th was used as a case study by the Center for Active Design in New York for its innovative approach to improving the health of residents, GGLO said.
The University of Washington owns the land, and arranged a long-term lease with Security Properties to develop the site in a joint venture with a capital partner.
Employees from the UW and Seattle Children's get priority in renting the units. The goal is to help replace housing that was removed for an expansion at Seattle Children's.
Apartment Acquisition: $95.8 MillionCommercial Executive Magazine
Here's a first look at NBBJ's design for the Global Innovation Exchange
Journal Staff - Daily Journal of Commerce
Students are expected to start classes at the Bellevue campus of the Global Innovation Exchange by fall 2017.
To make that deadline, Wright Runstad & Co. wants to begin construction next spring at the 36-acre Spring District on a three-story, 86,000-square-foot building to house the initial graduate technology program.
Wright Runstad recently filed a design review application with the city of Bellevue showing images of the proposed structure and giving a construction timeline.
NBBJ is designing the GIX building, and Lease Crutcher Lewis is the general contractor.
GIX is a project-based technology institute created through a partnership of the University of Washington and Tsinghua University in China. The GIX website describes it as “a new way to educate innovators and spur innovation.” Programs will focus on the development and design of new technology, as well as entrepreneurship.
Microsoft contributed $40 million to GIX.
Next fall, the two universities will offer a dual-degree program. The initial cohort of students will spend their first year at Tsinghua before moving to the GIX campus in Bellevue in 2017. Subsequent cohorts will start at GIX in Bellevue.
The school initially will offer a 15-month master's degree in technology innovation with a focus on connected devices. In 10 years, GIX's website said, the goal is to have more than 3,000 students and offer additional programs in subjects such as mobile medicine, clean technology and smart cities.
A public meeting on the project is set for 6 p.m. Dec. 15 at Bellevue City Hall, 450 110th Ave. N.E.
In addition to space for GIX, the building will have 3,200 square feet of retail, 200 underground parking spaces and about 5,500 square feet of decks.
The design shows a “folded roof” with heights that range from 45 to 55 feet.
The team is going for a modern aesthetic but will use vertical expanses of glass and brick to reflect the area's industrial history, according to design documents.
The Spring District will be built around a future Sound Transit light rail station and could have up to 5.3 million square feet of offices, retail, housing and parks. Development could cost more than $2 billion.
Security Properties now is constructing five apartments buildings with 309 units and beginning to plan the second phase: 279 units in three buildings. Wright Runstad has permits for an office building and is seeking permits for a building that will house a brewery and creative office space.
The GIX website said it will try out new models of global learning. Other research universities could join as partners in the future, as well as companies and nonprofits.
Nevada Real Estate News: Joint Venture Between Security Properties and New York Life Real Estate Investors Acquires Black Mountain Villas Apartments in HendersonStaff Reporter - Realty Today
Black Mountain Villas, a 296-unit, multi-family property located in Henderson, Nevada was recently acquired by Security Properties through its Security Properties Multi-family Fund III in its second joint venture with New York Life Real Estate Investors.
"We feel that townhome product is undersupplied in Henderson on the rental side. New rental construction features primarily one and two bedroom units while the for-sale side usually builds the bigger units, but often with minimal amenities," said Davis Vaughn, Investment Manager of Security Properties. "By updating the interiors and amenities, we plan to offer the amenities typical of newer multi-family developments in a property with larger units. Once the renovation is complete, this asset will offer distinctive condo-style unit types, but with the convenience and flexibility of renting. We look forward to creating value for our investors with this acquisition."
According to the press release of Security Properties in PR News Wire, the Black Mountain Villas Apartments was built in three phases between 2001 and 2006. All the 296 units of the multi-family property feature three bedrooms, two-and-a-half bathrooms, and two-car direct access garages. The said property was originally built as a condominium-type building. As a result, all units offer a two-storey townhome style, with large floor plans and garages that are very rare in the area.
Extensive upgrades and renovations such as updates in the interiors of all units are being planned in order for the Black Mountain Villas Apartments to compete directly with Class A multi-family properties in the area.
Madrona Ridge Residential, an affiliate of Security Properties, is responsible for the management of the property.
Security Properties is a Seattle-based national real estate investment, development and operating company that has been providing quality housing to its residents as well as excellent financial performance for its investors for more than 45 years.
New York Life Real Estate Investors is a full service, fully-integrated real estate enterprise that has market-leading capabilities in origination, underwriting, and investment in real estate equity products and related debt, including real estate equity investments, commercial mortgage loans, commercial mortgage backed securities, and unsecured REIT bonds.
188-unit DuPont community sold to Seattle real estate firm
Emily Parkhurst - Digital Managing Editor - Puget Sound Business Journal
The Clock Tower Village in DuPont has sold to a Seattle real estate firm.
Security Properties bought the 188-unit property for $30 million, the company announced Thursday.
The community is near Joint Base Lewis McChord, which is one of the state's largest employers. DuPont is also where Amazon has a huge fulfillment center and State Farm's operations campus is located.
Security Properties is currently developing a two-phase project in Bellevue's new Spring District. The latest phase of the project includes 279 new apartments. The $2.3 billion Spring District project, is modeled after Portland's Pearl District and includes access to rapid transit. A new technology graduate program will be located there.
Security Properties lists the Puget Sound region as one of its target markets, where it owns the 344-unit Millington at Merrill Creek and Everett, 252-unit Terra Heights in Tacoma and the 179-unit Panorama in Seattle.
Security Properties affiliate Madrona Ridge Residential will manage the property.
Security Properties and JLL Preserve Affordable Housing Property: The team secures $25 million in new Bridge-to-Resyndication financing
Donna Kimura - Deputy Editor - Affordable Housing Finance
JLL Capital Markets officials announced the firm has secured a $25 million Freddie Mac Bridge-to-Resyndication loan for Security Properties to acquire and rehabilitate Heatherstone Apartments, an existing 455-unit affordable housing property located in Kennewick, Wash.
Security Properties simultaneously executed a rate lock on a $34 million Freddie Mac Tax-Exempt Loan (TEL), featuring a 30-month forward-rate lock term.
“The bridge loan, combined with the forward-rate lock TEL, allowed Security Properties to quickly and efficiently acquire much-needed existing affordable housing stock and to cement plans for the preservation and rehabilitation of the affordable housing stock 30 months from now,” said Tim Leonhard, JLL managing director. “Freddie Mac’s new Bridge-to-Resyndication program, which JLL helped develop last fall, is playing a major role in the preservation of affordable housing by allowing dedicated affordable housing developers to compete with traditional cash-on-cash buyers to quickly acquire existing affordable housing stock while eliminating interest rate risk on a future preservation transaction at the time of initial acquisition. We see significant runway and increased demand ahead for this loan product.”
The bridge loan features an 82.5% loan-to-value ratio and has a three-year, interest-only term, and an initial rate of 2.87%. The TEL loan features a fixed rate of 4.63% on a 17-year term, with two years of interest-only followed by a 35-year amortization schedule.
“The preservation of Heatherstone Apartments is at the core of our mission,” said Bryon Gongaware, manager director of affordable housing at Security Properties. “This transaction presented several challenges: With the TEL, we were able to close quickly and compete with conventional buyers, and forward-rate lock the tax-exempt bonds, mitigating a key risk in the transaction. With this financing, Security Properties has a well-defined plan to execute a significant renovation to the property that will improve the apartment community and preserve housing affordability for the long term.”
Additionally, the TEL interest rate lock offered the flexibility of a 10% downward resizing without penalty, should certain loan sizing assumptions change between the time of initial closing and the closing of the TEL. The borrower also has the ability to increase the TEL amount at final closing at a blended rate should income exceed the amount underwritten at initial closing.
JLL Capital Markets is a full-service global provider of capital solutions for real estate investors and occupiers. It recently acquired Oak Grove Capital.
Security Properties is a national real estate investment, development, and operating company headquartered in Seattle.
UNDER CONSTRUCTION: PEARL BLOCK 136
Construction has begun on Pearl Block 136, which will be located on the site of the former PNCA Goodman building. The project consists of two buildings separated by a publicly accessible courtyard: a 5 story office building facing NW 13th Ave; and a 15 story residential tower facing NW 12th Ave. Underground parking for both buildings will be accessed from NW 12th Ave, with 211 vehicular parking spaces and 332 long term bicycle parking spaces. The design of the project is by Seattle based architects Mithun, for developer Security Properties.
The project site is at NW 13th & Johnson in the Pearl District. The site was formerly home to the Pacific Northwest College of Art’s main campus building, which was demolished in the second half of 2015. The College sold the building to Security Properties in 2013 for $11.75 million, which helped pay for their move into the 511 Building.
Early meetings between the project team and the Pearl District Neighborhood Association resulted in three requests from the neighborhood: that the project include publicly accessible open space at the same level as the street; that the height be kept low on NW 13th Ave in deference to the nearby 13th Avenue Historic District; and that the developer include office space to make up for the loss of daytime activity formerly provided by PNCA. The first two requests were major drivers of the final design: a 76′ tall building on NW 13th Ave and a 148’-4” building on NW 12th Ave, separated by a courtyard.
Though Security Properties typically develops residential projects, they decided to incorporate 60,000 sq ft of office space into the NW 13th Ave building in response to the third request by the neighborhood. The brick clad building will also contain 15,000 sq of double sided retail, which will spill out onto raised docks at both 13th Ave and the courtyard. At the top of the building will be a roof terrace and ecoroof plantings.
The taller of the two buildings will be just shy of the maximum 150′ allowed height. The primary materials proposed are window wall and aluminum composite panels. The tower will contains 208 residential units, including double height townhouses with entries directly onto NW 12th Ave and NW Johnson St. The 15th floor will have 6 penthouses with private terraces. A rooftop terrace will be provided, with community gardens for the residents.
REI to move headquarters to the Spring District in Bellevue
Marc Stiles - Staff Writer - Puget Sound Business Journal
Recreational Equipment Inc. (REI) on Tuesday said it is moving its headquarters from Kent to Bellevue.
The 77-year-old outdoor gear cooperative said it has signed a non-binding letter of intent to develop eight acres of land in the Spring District of Bellevue, a 36-acre development east of downtown.
"If all goes as planned, we aim to move in by 2020," REI said in a statement.
The co-op does not have a formal deal, according to the statement, but is "confident in the process."
In an email to employees, the company said that by the end of the summer, it will know either that we're moving forward with the Spring District plan, or that it will continue to search for a headquarters space.
The Spring District will have a light-rail station, and it's part of the Mountains to Sound Greenway – two attributes that are important to the culture of REI.
The company said it is "looking to create a hub for employees to come together to dream and scheme about life outdoors. The Spring District gives us the opportunity to create a unique space for the co-op, where our employees can gather and share our love for the outdoors."
The Spring District light-rail station is scheduled to open in 2023 as part of East Link, a $3.7 billion, 14-mile light rail extension from Seattle to Redmond's Overlake area.
REI owns its campus in Kent, where it has around 1,100 employees, making it the suburban city's second largest private employer behind Boeing.
A Seattle real estate company, Wright Runstand, is developing the $2.3 billion Spring District in a former warehouse district.
Security Properties Teamed With College on Nashville Apartment Buys; Gets Loan from Guardian Life
Commercial Real Estate Direct Staff Report - Commercial RealEstate Direct
Security Properties, which paid $53.7 million for a pair of Nashville, Tenn., apartment properties, invested in them in a venture with Loma Linda University's endowment.
The venture paid $34.4 million, or $247,482/unit, for the 139-unit Opus 29 at 301 29th Ave. North, and $19.33 million, or 224,767/unit, for the 86-unit Note 16 at 1226 16th Ave. South.
The properties were purchased from their developer, Stonehenge Real Estate Group of Nashville. Loma Linda, a southern California university with a focus on the health sciences, also had invested in their development through its $440 million endowment.
The Security Properties/Loma Linda venture funded its purchase in part with a $32.2 million mortgage with a 10-year term from Guardian Life Insurance Co. of America.
Opus 29 is in Nashville's West End neighborhood, two blocks west of Vanderbilt University and Medical Center. It is 97 percent occupied, with monthly rents from $1,330 to $2,523/unit. The property includes a swimming pool, fitness and business centers and a coffee bar.
The Note 16 property is in the city's Music Row area, near the east side of the Vanderbilt campus. It is 95 percent occupied, with monthly rents from $1,220 to $2,745/unit. The property has a courtyard and grilling area, business and fitness centers.
Security Properties, a Seattle developer, owns interests in 108 assets with nearly 16,000 multifamily housing units. Most of its holdings are in the Seattle and Portland, Ore., areas. It's targeting Nashville because of its appeal to millennials and to the city's reliance on the education and healthcare sectors, which historically have been relatively recession-resistant.
The Loma Linda endowment fund also owns apartment properties in Peoria, Ariz.; San Antonio, Tex.; and Richmond, Tex. Last month, a venture of Security Properties, Loma Linda University and Sunroad Enterprises acquired an apartment complex in Reno, Nev.
Security Properties Acquires Lakemont MultifamilyDavid Phillips - GlobeSt.com
BELLEVUE, WA—Security Properties and Pacific Life Insurance Company have purchased Overlook at Lakemont, a 400-unit, class B multifamily property located here, for $118 million. The May 25 deal was Security Properties’ first joint venture with Pacific Life.
Overlook is located in the prestigious Lakemont community where the average home price is nearly $900,000 and the average income within three miles of the subject property is $130,000. Lakemont is part of the Issaquah School District which is repeatedly ranked as one of the top districts in the state.
“This was a rare opportunity for us to buy in one of the best residential neighborhoods in the Seattle metro, “said Davis Vaughn, investment manager at Security Properties. “The quick I-90 access provides convenient commuting to some of the top employers in our region and the area demographics are outstanding. We think our renovation program will absolutely transform the asset and provide the high quality product that Lakemont expects.”
The location has a low density, suburban feel, the buyers say, but offers walkable retail including Starbucks and a high end local grocery store, Town and Country. To the northeast of the subject is Lakemont Park and to the southwest is Lewis Creek Park. Major employers that operate their corporate headquarters within six miles of Overlook include Microsoft, Costco, Expedia, T-Mobile, Paccar and Puget Sound Energy.
The apartment complex was built in 1992 and, with a few exceptions, is in original condition. The business plan is to renovate all of the units as well as update the clubhouse, replace the roof, re-side the property, and paint the exterior.
“The end result will be a core asset in an A+ location,” Vaughn added. “This is the only property in Bellevue of over 250 units built in the 90′s so it does not have some of the functional obsolescence of 80′s construction product, but it has an in-fill location that is irreplaceable.”
The property will be managed by Security Properties-affiliate Madrona Ridge Residential.
Overlook at Lakemont was purchased from Heitman. The sale was led by Jeff Williams, Chris Ross and Tim Brown of Moran & Company.
Major rehab includes a Tiki lounge for 1960s-era First Hill apartmentsJournal Staff - Daily Journal of Commerce
Security Properties has opened Panorama Apartments after a year-long renovation of the 18-story, 179-unit complex on First Hill.
Security bought the 1962 building at 1100 University St. in September 2014. It paid $73.98 million for what was then called Panorama House.
In a statement, the Seattle-based firm said it had envisioned turning the large apartments into smaller units, but decided that having large units would differentiate the building in this market.
Security said 68 percent of the units are leased.
There are one-, two- and three-bedroom apartments as well as penthouses. Most units have 175-square-foot patios.
The website says 860-square-foot one bedrooms are available starting at $2,672, and 1,383-square-foot three-bedrooms that start at $4,670. Some units come with up to two months free rent.
Units have parquet flooring, open-concept kitchens, built-in wine chillers, and washers and dryers. They also have marble windowsills and thresholds — holdovers from the original units — as well as quartz countertops, undermount sinks, and new cabinets in kitchens and bathrooms.
There are four three-bedroom, two-bathroom penthouses that range from 2,301 to 2,462 square feet. Security said these are some of the largest penthouses for rent in a Seattle high-rise.
Penthouses come with pantries and wood-burning fireplaces. Two have inner-facing courtyards. Rents are not listed.
Security said before the renovation, one of the penthouses was dubbed “the pink unit” for its pink tile, pink wallpaper and pink terrazzo floor.
Panorama Apartments amenities include a pool deck and entertainment area, bocce court, shuffleboard court, outdoor kitchen, seating, fire pit and a Tiki-themed lounge. There's also a fitness center, game lounge, bike storage and repair center, and a pet salon.
A clubhouse near the entrance has a kitchen, seating, conference room and patio.
There's parking for each apartment and additional spaces in an overflow lot.
Security Properties replaced the original electrical system, installed high-speed fiber networking, and added washers and dryers.
Madrona Ridge Residential is the property manager and Clark Design Group was the architect of record for the renovation.
At $9,350 a month, this apartment is far from the region’s most expensive
Marc Stiles - Staff Writer - Puget Sound Business Journal
Ten years ago the chatter in Seattle was about who had the most expensive condo. Today it's about who's got swankiest apartment.
There's a new luxury entry on Seattle's First Hill with the re-opening of the Panorama, where they're asking around $9,350 a month for four penthouses at the top of the 18-story building.
The $19 million, year-long renovation of the Panorama – a 1962 World's Fair-era tower at 1100 University St. – is done, and more than two-thirds of the 179 units have been leased. Rents start at $2,672 for a one-bedroom with up two months' free rent.
The owner of the Panorama, Security Properties of Seattle, thinks the the nearly 2,400-square-foot penthouses will appeal to successful entrepreneurs, professional entertainers and athletes and the doctors who work at nearby hospitals.
A couple rented the first penthouse, according to Security Properties CEO David Dufenhorst. He said the they are business owners and moved from the Martin in Belltown, where rent for an 1,820-square-foot penthouse is $8,000 a month, according to the property's website.
Security Properties acquired the Panorama in 2014 for $74 million. At the time, apartments were leasing at well below market rates. A two-bedroom, for instance, was available for $1,525. Two-bedrooms now start at $3,055.
Security built the marketing of Panorama around the property's 1960s style. The Panorama website urges would-be tenants to "reclaim your inner Don Draper," the lead character of the hit TV series "Mad Men." Panorama offers "a world of difference that brings mid-century style to fully remodeled homes." Marble windowsills and floor thresholds are holdovers from the old Panorama, and cabinet doorknobs and other hardware, while new, are inspired by the '60s. Clark Design Group was the architect of record for the renovation.
Apartments at the Panorama are larger than new-construction units. Security Properties was going to break them up into smaller residences, but company officials said they quickly realized that the bigger size would differentiate the property from the competition. The Panorama has 37 three-bedroom units, the most of any downtown Seattle building, according to Security Properties.
The penthouses at Panorama are far from the most expensive in the region. In downtown Seattle, a penthouse at the historic Cobb Building measures around 2,275 square feet and goes for $13,150 a month, said a source who asked not to be named.
Unofficially, the most expensive penthouses are in downtown Bellevue. This spring, the owner of a 4,058-square-foot condo atop One Lincoln Tower was looking to rent out the home for $20,000 a month. It was not clear Tuesday whether that apartment is still available.
At $20,000, it's still less expensive than up the street at the Bravern Signature Residences, where according to a leasing agent they're asking $25,000 for a nearly 5,900-square-foot penthouse.
Security Properties Acquires Avanti ApartmentsDavid Phillips - GlobeSt.com
LAS VEGAS—Security Properties has purchased Avanti Apartments, a 414-unit, class A multifamily property located in Las Vegas for $57.5 million. It is the Seattle-based firm’s fourth purchase in the Las Vegas market.
Avanti Apartments was built in 2010 and the units feature nine-foot ceilings with decorative crown molding, faux wood-style flooring, GE steel appliance package, large walk-in closets, garden-style tubs and stackable washer/dryers. Additionally, Avanti offers a complete amenity package including a resort-style pool with spa and cabanas, state-of-the-art fitness center, fireside lounges and picnic areas with barbecues. Security Properties will execute a light renovation of the unit interiors.
The property is ideally located along the Bruce Woodbury Beltway in northwest Las Vegas. The area currently has the lowest vacancy of the six Vegas submarkets at 4.63% per CBRE. The low vacancy, combined with the very limited recent and planned supply, results in strong rent growth forecasts in the area for the foreseeable future. The area is also home to a number of the market’s premier public and charter schools. Within just a four-mile radius of the property are three public elementary schools, two public middle schools, one public high school as well as two private charter schools.
The property is also near Interstate 215, providing residents quick access to both major retail and employment corridors. The Clark County Department of Public Works is currently underway with a construction project that will add two additional exchange areas as well as three overpass structures. The project is focused along a 2-mile strip of I-215 directly adjacent to Avanti and will result in increased accessibility to both the property as well as area retail and employment corridors.
Davis Vaughn, investment manager at Security Properties says the company acquired this asset because, “Avanti was a great opportunity for us to buy a core-plus asset in a dynamic location well below replacement cost. The recent and future expansion of the Providence and Skye Canyon master planned communities should strengthen the fundamentals of this area long term which will create value for our investors over the hold.”
The property will be managed by Security Properties-affiliate Madrona Ridge Residential.
Security Properties is a national real estate investment, development, and operating company headquartered in Seattle. Since its founding more than 45 years ago, Security Properties has acquired or developed over 66,500 residential units at a cost of over $3.35 billion.
Security Properties Acquires 432-Unit Arches at Hidden Creek Apartments in Chandler, ArizonaMultifamilyBiz.com
CHANDLER, AZ - Security Properties purchased Arches at Hidden Creek, a 432-unit multifamily property located in Chandler, AZ for $55 million. Security Properties now own five assets in the Phoenix marketplace.
Arches at Hidden Creek is located within the dynamic Chandler submarket. Chandler's median annual household income is approximately $71,000, 32% higher than Maricopa County, which covers most of the Phoenix MSA. Chandler's greatest strength is its employment base. Arches sits within five miles of 70,000 jobs in industries that include high-tech manufacturing, aerospace, bioscience, and advanced business services. Because of the city's central location and proximity to three freeways, it can pull from more than 1.7 million people within a 30-minute commute. The Price Road Corridor is the area's largest and most established employment center. Silicon Desert, as it is known, is located just one mile southwest of Arches.
The property is also within close proximity to the ASU Research Park (15,000 jobs), Arizona Avenue Business Parks (20,000 jobs), Downtown Chandler (5,000 jobs) and the Chandler Airpark (5,000 jobs). Less than 3 miles directly to the west of Arches lies the Chandler Fashion Center, an upscale, super-regional mall that encompasses over 180 stores and roughly 1.2M SF. The mall is widely considered the premier shopping destination in metropolitan Phoenix's Southeast Valley and is anchored by Nordstrom, Dillard's, Macy's and Sears.
Arches at Hidden Creek is a garden-style apartment community that was constructed in 1986.
The business plan is a moderate value-add. To date, 133 units have been upgraded throughout the property. Interior upgrades include: faux wood flooring, baseboards, black appliances, faux granite countertops, new cabinet fronts with hardware and painted cabinet boxes to match, light fixtures, two-tone paint, ceiling fans and updated hardware and plumbing fixtures. SP plans to continue this rehab strategy by renovating the remaining 299 original units to a similar interior scope.
According to Davis Vaughn, Director at Security Properties, the acquisition was made because, "Arches at Hidden Creek offers everything we look for in an investment. The Chandler job story is one of the best in all of Phoenix plus the location gives residents easy access to retail and enrollment in the top-rated Chandler school district. With a basis well below replacement cost, we expect to produce outstanding risk-adjusted returns to our investors with this purchase."
The property will be managed by Security Properties-affiliate Madrona Ridge Residential.
Lake Oswego apartments go for $78M
Jon Bell - Staff Reporter - Portland Business Journal
Three years ago, the One Jefferson apartment complex in Lake Oswego sold to San Francisco's Friedkin Realty Group and Jackson Square for $63 million.
Three years later, the same apartments have sold for $78 million, this time to Seattle's Security Properties and the California-based Pacific Life Insurance Company.
The partners announced the deal in a release today. Jon Hallgrimson, Eli Hanacek and Josh McDonald of the CBRE Capital Markets Pacific Northwest Institutional Properties team represented both the seller and the buyer. Nick Santangelo of CBRE’s Debt & Structured Finance organized the financing for the acquisition.
The 347-unit complex was built in 1987 and 1990. Security Properties plans to renovate the unit interiors and improve amenity areas and aesthetics.
"This deal epitomizes what we look for in value-add projects," said Barrett Sigmund, a senior director at Security Properties. "Lake Oswego boasts some of the best schools, demographics and proximity to jobs of any suburban Portland submarket. Additionally, given the barriers to entry and limited future supply, there should be little new product in the submarket for the foreseeable future. This dynamic allows us to reposition the property and provide residents a best-in-class physical asset on par with the A+ location."
Madrona Ridge Residential, an affiliate of Security Properties, will manage the property.
Perseus II: A new icon for the Greenwood neighborhoodSeattle Daily Journal of Commerce
Today, Seattle artist Miguel Edwards’ new moving 30-foot-tall kinetic sculpture is being installed at the corner of Northwest 85th Street and First Avenue West, in the Greenwood neighborhood. Dubbed ‘Perseus II,’ the sculpture is situated just east of the new 105-unit Janus Apartments building, Seattle-based developer Security Properties commissioned the artwork as part of its commitment to enhancing each new project and neighborhood with unique and local artwork.
About “Perseus II”
Solar panels built into the artwork will supply all the electricity needed to move the pendulum and power the light.
The sculpture is composed of a steel tripod base with a curved center pendulum. A slow kinetic rotation is created by the pendulum which is weighted at the top by a stainless sphere and at the bottom by a stainless cone. Solar‐powered LEDs will illuminate two tiers of glass spheres and fins. All glass elements will be set aglow either internally or by adjacent LED lights.
About the artist
Miguel Edwards has lived in the Ballard-Greenwood area for about a decade and has had several exhibitions featured in local galleries as part of the Greenwood Art Walk.
According to Edwards, “Perseus II” draws on references to mythology and duality: exploring man’s relationship with things beyond his physical grasp.
For this project, Security Properties was particularly compelled by artist Miguel Edward’s vision of “Perseus II” due to its potential to become an icon for the neighborhood. The aim is for all Greenwood residents to feel ownership of the sculpture and for Seattleites to someday associate it with Greenwood. The sculpture is also intended to boost a sense of pedestrian safety and walkability along First Avenue and 85th Street.
To Carkeek Park regulars, the sight of Perseus II may invoke a sense of déjà vu. The installation’s younger and smaller sibling, “Perseus I” was temporarily installed near Carkeek Park’s playground in 2010 as part a Center on Contemporary Arts exhibit.
About Janus Apartments
Janus is the Roman god of gates, transitions, and new beginnings. He was depicted as having two faces: one facing the past, and one facing the future. To Security Properties, this aligned nicely with the Janus Apartments site and the building. The building itself has two faces, one facing single-family homes to the south, and one facing 85th Street to the north, each with a distinct façade. The site can be seen as a sort of gateway between the neighborhood and the commercial core.
The building seeks to honor the transition that Greenwood is experiencing, paying homage to its past while celebrating its present and future. The name Janus stuck immediately and has driven much of the team’s design and art decisions.
City living is full of options – always growing and changing. Janus Apartments is part of the artful and eclectic neighborhood of Greenwood, just 10 minutes north of downtown Seattle. “Perseus II” serves as a constant reminder of life in motion.
Security Properties breaks ground on new apartments in Bellevue’s Spring DistrictSam Keeley - Seattlecurbed.com
Security Properties has begun construction on the second phase of it’s mixed-use residential development in Bellevue’s 36-acre Spring District neighborhood.
Located nearby Phase I (otherwise known as Sparc Apartments), this phase consists of three buildings with 279 residential units. They’ll be a mix of studio, one-, two- and three-bedroom apartments above two ground-floor commercial spaces totaling 3,700 square feet. Building amenities are expected to include rooftop decks, a large fitness facility, a pet salon, and common areas.
Security Properties foresees a 24-month construction timeline and the project will be built to LEED and Built Smart program standards. Mithun is the architect and Walsh Construction is the general contractor.
Sparc Apartments was a larger, five building project that totaling 309 residences and 15,000 sf of commercial space. Two of those buildings are expected to be completed on February 2017 and pre-leasing will begin early next year. All five Sparc buildings will open to new residents in June 2017.
The 36-acre, $2.3 billion Spring District is being developed around the impending light-rail station that’s scheduled to open there in 2023. By that time, companies such as REI will have joined the many residential developments planned. Both phases of Security Properties’ complexes are along Northeast 12th Street, between 120th and 124th avenues Northeast.
Security Properties starts another 279 apartments in the Spring DistrictBrian Miller - Journal Staff Reporter - Daily Journal of Commerce
With its Sparc apartments well underway in Bellevue's new Spring District, Security Properties broke ground this week on a second mixed-use complex there.
This one has no name yet, but it will have a total of 279 units in a nine-story building and two six-story buildings. About 3,700 square feet of commercial space are planned with two levels of underground parking for 255 cars. The size is about 367,000 square feet.
In a statement, Security Properties' John Marasco said, “With new residential, retail and office projects on the way, including anchors Global Innovation Exchange and REI, together with the rapidly advancing Sound Transit East Link, we're seeing the long-awaited Spring District take shape, and we couldn't be happier to be a part of it.”
Mithun designed the project, which is scheduled for completion in late 2018.
Units will range from studios to three-bedroom apartments. Rooftop decks, a fitness center, pet salon and bicycle maintenance/storage areas are planned.
Security Properties' team also includes equity partner HAL Real Estate, financial partner Pacific Life Insurance Co., general contractor Walsh Construction and structural engineer Swenson Say Faget.
The 1.8-acre site is just east of Sparc. Both projects are at the south end of the Spring District, along Northeast 12th Street, between 120th and 124th avenues Northeast.
The five buildings in Sparc range from three to nine stories, and will contain 309 residential units and 14,000 square feet of commercial space. GGLO is the architect for the 2.5-acre project. Sparc's first two buildings are set to open next February with 79 units.
The 36-acre, $2.3 billion Spring District is being developed by Wright Runstad and Shorenstein Properties. The new neighborhood will be centered on a light-rail station scheduled to open in 2023.
AMLI Residential also is planning 220 units on 1.5 acres, with a possible start date next year. REI is expected to occupy eight acres there when it moves its headquarters from Kent in 2020.
Huge Bellevue neighborhood continues to grow
Kipp Robertson - Reporter - Mynorthwest.com
The 36-acre Spring District neighborhood is coming together.
Security Properties began construction on its second phase of mixed-use development last week.
The latest phase of construction will include three buildings that will consist of 279 residential units and two ground floor commercial spaces.
“For a number of years, the Spring District was merely a conceptual neighborhood fashioned after Portland’s renowned Pearl District,” said John Marasco, Security Properties’ chief development officer. “With new residential, retail and office projects on the way, including anchors Global Innovation Exchange and REI, together with the rapidly advancing Sound Transit East Link we’re seeing the long-awaited Spring District take shape and we couldn’t be happier to be a part of it.”
The first phase of the Spring District includes five buildings totaling 309 residences and 15,000-square-feet of commercial space. Two of those buildings are expected to be completed February 2017. All five buildings — known as the Sparc Apartments — will be open to residents in June 2017.
Security Properties anticipates a 24-month timeline for construction on the second phase.
REI to relocate headquarters to Spring District
Outdoor co-op REI announced that it has finalized an agreement to relocate its headquarters to the Spring District.
“We aspire to create something unexpected that embodies our co-op values. We’re envisioning a sustainable, transit-friendly, urban neighborhood that blends working space with green space, takes inspiration from the community around it, and connects to the rest of the Puget Sound area,” said Eric Artz, REI’s executive vice president and chief operating officer. “After 28 years in Kent, we have outgrown our current headquarters. So, we will build a campus as a gathering place that fosters creativity and connects thousands of increasingly mobile employees.”
REI will develop eight acres of land between SR 520 and Bel-Red Road.
Plans call for REI to relocate by 2020.
One of the benefits REI sees in the Spring District is the access to better mobility now and in the future. That includes a light rail station planned to open in the area.
Work began on the Spring District in 2014. Construction on the first phase of the neighborhood broke ground in June 2015. It is a 36-acre mixed-use urban neighborhood near the intersection of SR 520 and I-405. It will ultimately feature commercial, residential and retail including hotels, restaurants, and shops.
The $2.3 billion project is one of the largest urban development projects on the West Coast. Work is being done in phases, with the eastern and southernmost blocks developed in Phase One. Development will eventually move north towards the future East Link rail station.
Jackson Square Properties Buys Kent Apartment Asset for $56.5MM
(EDITOR’S NOTE: San Francisco-based Jackson Square Properties purchased the asset for $56,539,200, or approximately $186,000 per unit, accoridng to public records. The sale closed on December 1, 2016. The Admiral Capital Group and Security Properties joint venture purchased the asset in February of 2015 for $40,050,000, or approximately $132,000 per unit.)
New York – Admiral Capital Group and Security Properties today announced the successful sale of Waters Edge Apartments, a 304-unit multifamily property located in Kent, Washington, in the Seattle MSA on November 30, 2016.
Admiral and Security Properties acquired the apartment community in February 2015 through a joint venture. The investment provided an opportunity to purchase a well-located asset in the fourth largest manufacturing and distribution center market in the United States at a discount to replacement cost.
During its ownership, the joint venture repositioned the property by curing deferred maintenance, enhancing the exterior and upgrading unit interiors. Select exterior improvements included re-siding the entire property, replacing wooden decks and installing a new playground amenity. Interior renovations included modernizing kitchen cabinets, appliances and flooring and renovating bathrooms. Overall, the upgrades repositioned the property to compete with higher quality assets with higher overall rents.
“Our strategy is to identify capital-deprived assets in markets with a supply and demand imbalance,” said Dan Bassichis, Co-Founder of Admiral Capital Group. “Waters Edge was an ideal fit and provided the opportunity for our partnership to invest the necessary capital to improve the property and experience for the residents and capture a share of the growing demand and rent growth in the submarket.”
“Waters Edge is representative of the opportunities we like to target. By executing an extensive renovation plan, including a complete re-side, the partnership was able to enhance the asset’s physical condition to accurately align with its submarket-leading location,” said Barrett Sigmund, Senior Director of Investments at Security Properties.
“The investment in Waters Edge was the continuation of a long-term relationship with SPI,” said Jarett Kaplus, Principal at Admiral. “We continue to proactively seek additional value-add multifamily investments nationwide, including in the Pacific Northwest.”
Philip Assouad and Giovanni Napoli, commercial real estate brokers with Kidder Mathews, handled the Waters Edge sale.
The sale represents the ninth realization for Admiral in its first value-add real estate fund, Admiral Capital Real Estate Fund, L.P. (“ACRE I”). To date, Admiral has invested in 14 assets with an aggregate purchase price of over $370 million and continues to actively pursue value-add opportunities in top 25 MSA’s.
About Admiral Capital Group
Admiral Capital Group (“Admiral”) is a real estate and private equity investment firm with offices in New York, San Antonio and Seattle. Admiral was co-founded by David Robinson, US Naval Academy graduate, philanthropist and NBA Hall of Famer, and Daniel Bassichis, formerly of Goldman Sachs. Admiral Primarily invests in real estate through a partnership with USAA Real Estate Company and targets value-add opportunities in office, multifamily, hotel and retail properties. Admiral has acquired over $500 million of real estate assets since 2008. Admiral’s founders also have pledged 10% of their profits to philanthropic causes in certain areas where Admiral invests, building on Robinson’s lifetime commitment to support education and lower-income communities. For more information, visit www.admiralcg.com.
About Security Properties
Security Properties is a national real estate investment and operating company headquartered in Seattle, Washington. For more than 47 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 80,000 residential units at a cost of over $4 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.
Franklin's The Artessa luxury apartments sold for $57.5 million
Getahn Ward - Growth and Development Reporter - The Tennessean
A Seattle-based real estate investment, development and operating company has paid $57.5 million for the 250-unit Artessa luxury apartment community in Cool Springs.
The acquisition is the third in metro Nashville this year for Security Properties, which an institutional investor joined in buying the community at 1034 Windcross Court in Franklin.
The deal is also one of the Nashville area's biggest multifamily investment sales this year. In May, Irvine, Calif.-based investor Steadfast Income REIT Inc. paid $110 million for 724-unit The Landings of Brentwood to set a new record total dollar price paid for a multifamily asset in the Nashville region.
Security Properties' CEO David Dufenhorst said purchase of The Artessa reflects his company's commitment to metro Nashville. In April, the company acquired the Music Row-area Note 16 and the Centennial Park-area Opus 29 apartment communities in Nashville.
The Artessa was completed in January and is nearly 90 percent occupied.
"We are seeking locations that will provide durable cash flow and strong yields," Dufenhorst said.
"With the great Nashville economy largely driven by recession-resistant health care and education sectors, Williamson County having an extremely tight office market and The Artessa having an advantageous competitive position in its submarket, we expect this acquisition to perform well over a long hold period.
The Artessa features high-end unit interiors and luxurious common areas. Security Properties said it intends to improve the common areas by adding an additional BBQ area, installing LED lighting, expanding the business center, adding a sports lounge and executing on other smaller projects.
Brokers Russ Oldham, Steve Massey and Brett Kingman of CBRE in Nashville represented The Artessa's seller in the transaction.