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BELLEVUE, WA-Maxwell Drever has attained the return he was looking for on Overlook at Lakemont two years earlier than expected. On behalf of the private Drever Multifamily Opportunity Portfolio Fund LLC, Drever’s Concierge Asset Management paid $38.6 million for the tired 400-unit hillside apartment property in mid-2002. It then invested another $4.7 million on upgrades and was able to raise monthly rental collections by more than 25%. Last week, Ameriton, a wholly owned subsidiary of multifamily REIT Archstone-Smith, paid slightly more than $50 million for the property.”It’s a testament to how enhancements can really take a property to the next level,” Drever tells GlobeSt.com. “We raised occupancy from 90% to 95%, but we raised monthly rental collections by 27% [from $298,000 to $380,000].”The sale generated, at the property level, an internal rate of return exceeding 20%, according to Drever, who expected to have to hold the property for four years to achieve such a result. “The reality is the market is still soft, but because we created a good-looking asset we were able to get a premium price for it,” he says. “We also don’t expect the market to improve much more in two years.”Seattle-based HSC Real Estate managed Overlook’s day-to-day operations for Drever. Broker David Young with Hendricks & Partners in Seattle represented Archstone-Smith in the transaction. Young says Archstone also got what it wanted out of the deal. “Archstone got a beautiful, well-positioned, in-fill apartment community in one of King County’s most affluent neighborhoods, and it can only grow in value,” he says.

Adds Mark Peppercorn, Archstone group vice president, “Overlook fits our investment criteria very well. The community is on Cougar Mountain–a prime location on Seattle’s Eastside. It’s situated in an affluent neighborhood surrounded by homes worth up to $4 million and close to I-90.” Drever’s contrarian investment strategy dates back to Seattle in the early 1970s, when Boeing shed some 63,000 workers. During that period, Drever bought up more than a dozen Puget Sound apartment complexes at depressed prices and sold them off at a profit in the late 1970s, rolling the money into larger, institutional-grade properties elsewhere in the nation. Drever eventually built up a Western US portfolio up to 20,000 units before merging with a REIT in 1997, at which point he was under a non-compete clause. When an investment group took the REIT private in 1999, the non-compete clause expired, opening the door for Drever to do it all over again.

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