Arcadia Townhomes Trades Hands for $54M

FEDERAL WAY, WA-Los Angeles-based real estate investment firm TruAmerica Multifamily has acquired Arcadia Luxury Townhomes, a 309-unit apartment complex here, for $54 million. Industry sources unrelated to the deal tell GlobeSt.com that the seller was Cornerstone Advisors/Legacy Partners.

The acquisition follows the buyer's recent $38.3-million purchase of the Vineyards in Gilroy, CA, and represents the second addition this month to the firm's nearly 10,000-unit portfolio. It is also TruAmerica's first metro-Seattle acquisition. The transaction was brokered by David Young, Corey Marx and Seth Heikkila from the multifamily brokerage division of Jones Lang LaSalle.

The only townhome-style property in the area, Arcadia features unique, large, two- and three-bedroom floor plans, which average 1,227 square feet and create a community like environment. The property totals approximately 379,000 rentable square feet on 6.7 acres. The complex has a parking ratio of 2.2 spaces per unit and both attached and detached garages.

TruAmerica intends to capture additional premium in rents through enhancing onsite amenities by creating a new business center and a dog park, as well as upgrading the fitness center. In addition, renovations are planned for the two- and three-bedroom units, including replacing ground-level flooring with luxury vinyl plank materials. Also, the firm is bringing in a best-in-class third-party management company, which holds a larger market presence, to add value with additional efficiencies of scale and improve the property's day-to-day operations.

“The Pacific Northwest is a prime target market for TruAmerica and its investments, with Arcadia being the first of several acquisitions we will be closing in the first quarter of 2014,” says Noah Hochman, director of acquisitions at TruAmerica. “Arcadia recently underwent a $13.4-million renovation. This acquisition was well below replacement cost with a strong in-place yield and had attractive agency financing.”

Hochman adds that Seattle's “dynamic economic engine is providing some of the best apartment investment fundamentals in the country, with metro-Seattle rents leading the nation at a 6% year-over-year growth. The city's market vacancy rate of 3.3%—its lowest in 15 years—makes the entire region extremely attractive for our first multifamily acquisition outside of California.”

According to TruAmerica, since Seattle currently ranks as one of the nation's top rental markets, the cost of renting in downtown locations is causing tenants to search nearby neighborhoods for affordable alternatives that allow convenience access to employment centers, so TruAmerica plans to capitalize on the property's advantageous location. There are currently no major commercial or community developments in Federal Way's pipeline, making Arcadia a “highly attractive option to commuters seeking an affordable, high-quality alternative to priced-out units in Downtown Seattle.”