This deal will provide first mortgage financing in the amount of $88.65MM for acquisition and renovation. The property is a 179-unit, 18-story high rise apartment building that was built in 1962, located in Seattle, WA. Located at the intersection of Seattle's Downtown, First Hill, and Capitol Hill neighborhoods, the Property is located within walking distance of significant employment in Seattle's CBD (~350K jobs) as well as thousands of medical jobs in the three-hospital, regional medical hub on First Hill. The property's location is also located walking distance from the retail and dining amenities of Capitol Hill. The property is truly unique in that it offers a rare rooftop deck, large unit sizes, and expansive window lines providing abundant natural light and unmatched views.
We expect the apartment sector to perform in line with core sector averages post-COVID. Sun Belt and Mountain West markets should outperform Midwest and Northeast markets due to demographic tailwinds, despite various risks in the short-term for all markets, such as higher credit loss, higher supply growth, and a decline in the population of prime-age renters.
- Located near the lively Pike-Pine Corridor, the property is at the heart of Seattle’s urban scene. The neighborhood is the gold standard for achieving the highest rents in the city based upon access to live, work, play. Achieving a Walk score of 99 and Transit score of 100, the property is at the center of the best of what Seattle has to offer. This First Hill location near I-90 and the future east Link Light Rail expansion, as well as SR-520, also grants convenient access to the Eastside and its rapidly expanding employment base.
- With a median household income of $211,000, residents, on average, only attribute 21% of their income to rent (based on post renovated mark to market rent). Compared to other major tech metros such as New York where residents’ rent-to-income ratio exceeds 35%, the property’s relative affordability attracts high wage workers and reflects room for future rental upside.
- The Seattle apartment market has made a comeback in 2021 after last year's COVID-induced slump. Rents have increased by more than 10% since only the start of the year and now sit at an all-time high. In stark contrast, the average asking rent last year declined for the first time since 2009. While the pandemic and recession upended demand last year, the metro has regained its standing as one of the country's hottest apartment markets. The current market vacancy rate of 4.6% is lower than the 10-year average of 5.9%.