KW, International Partners Spend $117M on Apts.

SEATTLE-Two multifamily developments in the region–the 400-unit Avalon Redmond apartments and the 278-unit Indigo Springs apartments–have been acquired by a Kennedy Wilson-led buyer for $117 million. Avalon Redmond sold for $81.25 million while Indigo Springs traded for $36 million. The sales closed at the end of June.

KW Multifamily, which is based in Beverly Hills, CA, says both transactions included “significant participation” from international investors and debt from GE. The Avalon Redmond acquisition was completed with equity from, among others, Dubai Investment Group and a large Japanese institutional investor,among others. The sellers of the two properties were Avalon Bay Communities and Equity Residential, respectively.

Bob Hart says the company’s track record of acquiring and adding value to well-positioned, under-performing assets in supply-constrained markets is why it continues to attract equity from a wide diversity of U.S. and international investors despite the dislocated credit markets. KW’s Pacific Northwest portfolio now totals approximately 3,000 units. In the Puget Sound region, it also doesn’t hurt that strong job growth and in-migration has apartment vacancy at approximately 4%, according to Dupre + Scott, a local multifamily specialist.

Avalon Redmond was built in 1983 on 24 acres in Redmond, WA, home of Microsoft Corp. The development consists of 71 two and three-story wood-framed buildings with exterior wood siding and trim, plus a similarly constructed clubhouse and leasing center. The garden-style community offers one, two and three-bedroom units ranging from 710 to 1,488 sf, as well as parking for 624 vehicles. Amenities include a pool, two saunas, a fitness center, an indoor spa, two tennis courts and a cyber café.

KW Multifamily plans to invest an additional $4.5 million in the asset to upgrade unit interiors and finishes and overhaul the clubhouse. “While Avalon Bay did a great job under its ownership, we see tremendous upside in the property and are confident in our ability to bring significant investment yield to our partners,” says Eddie Ring, senior managing director of KW Multifamily.

Indigo Springs was built in 1991 on 24 acres in Kent, WA, 25 miles south of Seattle. The complex consists of 25 wood and vinyl buildings in a natural wetland setting. The development’s one, two and three-bedroom units range from 750 sf to 1,130 sf. Amenities include a clubhouse with a fireplace and full kitchen, a fitness center, outdoor pool and spa, outdoor basketball court and a children’s play area.

Ring says KW plans to invest an additional $3.3 million in the asset to modernize apartment interiors and enhance common areas to achieve rents on par with competing communities in the area. “Because Indigo Springs never received any significant refurbishments, its rents are lagging behind those of comparable properties that have been recently renovated,” he says.