The property was acquired by Drever Multifamily Opportunity Portfolio Fund LLC, which includes Drever's family and GE Capital among other institutional and private investors. The Fund has been capitalized to buy $500 million of large apartment complexes nationwide and is bullish on King County, Paul Odland, president and CEO of Drever's Tiburon, Calif. based Concierge Asset Management, sponsors of the fund.
In the early 1970's, 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 U.S. portfolio up to 20,000 units before merging with a REIT in 1997. When a private investment group took the REIT private in 1999, the non-compete clause expired, opening the door for Drever to do it all over again.
The Overlook at Lakemont is a low-density apartment community on 27.5 acres. Built in 1992, it's surrounded by mature evergreen trees and private homes valued at $400,000 to $4 million. "We like high visibility locations in affluent neighborhoods and the Cougar Mountain location off I-90 is one of the very best in Seattle," says Odland, explaining that the location is 20 minutes from Downtown Seattle, 10 minutes to Downtown Bellevue and five minutes from Microsoft's new Issaquah campus.
Odland says Overlook will immediately undergo an extensive $5 million upgrade, after which they will raise rents, raise occupancy from the current 90% and hopefully turn what is believed to be around a 6% cap rate into a 9% cap rate. The bulk of the funds for both the purchase and renovation were provided by American International Group. The $32-million loan was sourced by Bernard Branca of L.J. Melody & Co. Jerry Bell of HSC Real Estate in Seattle has been retained as on site property manager.
"Our strategy is simple and consistent," explains Drever. "Almost every economic boom in the last 30 years has been followed by a significant downturn. That's when we buy tired but well-located former first tier-apartment properties and reposition them to class A status. We have made the majority of our acquisitions coming out of the trough of each cycle, and hopefully getting in -- not too early or too late --on the rebound."
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