Case Studies
Skye at Belltown
SEATTLE
Investment Rationale
- The investment presented an opportunity for the sponsor while at Mill Creek and AEW Capital Management to acquire a Class B apartment community in an A+ location of Seattle at a significant discount to replacement cost.
- The 370-unit community sits on a 1.32-acre site in the Belltown submarket of Seattle, WA and consists of 18-story Type I construction with an attached three level parking structure.
- Sponsor addressed deferred maintenance, converted ground floor retail to amenities and implemented an interior unit rehab program that increased rents while still providing an affordable living alternative in a highly desirable location.
- Sourced off-market through relationships with EQR and sponsor having a deep knowledge of the submarket, asset, and seller.
Investment Update
- The venture invested $4.2M in capital improvement, including converting ground floor retail into a clubroom, state-of-the-art fitness center, and storage. Upgraded Skydeck and painted the building. Through aggressive asset management program, NOI has increased 43% since its inception.
- A $3.4M comprehensive renovation was completed upgrading the units with luxury vinyl plank flooring, quartz countertops, cabinetry, and adding ten units in old amenity space on the second floor.
- Asset is currently a long-term hold for AEW and the returns are unrealized. Mill Creek sold its interest to IBM but continues to manage the property.
Financial Highlights
$MM, UNLESS OTHERWISE NOTED
Purchase Price
95
Purchase Price
per unit ($k)
256
In Place NOI
4.2
Going In Cap Rate
4.4%
.
Additional Capital Invested
7.6
Stabilized NOI
9.9
Stabilized NOI Yield
9.6%
Hold Period
Long term
Capped NOI (Year 10)
9.9
Exit Value
Unrealized
Exit Value per unit ($k)
TBD
Exit Cap Rate
TBD
Unlevered IRR / CFx
TBD
Levered IRR / CFx
TBD
SOURCES:
Loan
52.4
Equity
51.5
.
.
Total Sources
103.9
USES:
Purchase Price
95
Closing Costs
0.4
Acquisition Fee
0.5
Loan Fee
0.3
Capital Improvements
4.2
Unit Rehab
3.4
Total Uses
103.9