279-Unit Peninsula Complex Fetches $26M

GIG HARBOR, WA-Prometheus Real Estate Group is the new owner of the largest multifamily development ever completed on the Gig Harbor Peninsula. The Redwood City, CA-based real estate company acquired the 279-unit Cliffside complex from Carl Marks Real Estate Group of New York for $26 million.Located six miles from downtown Tacoma and four miles from Downtown Gig Harbor, the 31-acre development sits on a 140-foot bluff on the west side of the Tacoma Narrows Bridge on State Route 16. Most of the apartments have views of Puget Sound and Mount Rainier. The 25-building complex was 90% occupied at the time of sale.The $93,000 per-unit sale price is the highest price ever paid for an apartment project in Pierce County. Based on in-place NOI, the sale price represents a cap rate in the low-to-mid 5% range. Jon Hallgrimson of CB Richard Ellis had the disposition assignment for CMRE. Prometheus reportedly beat out several bidders for the asset. CMRE managing director Marty Schiffman tells GlobeSt.com that Prometheus liked the project for several reasons, not the least of which is the fact that it has been developing a presence in the Puget Sound region. In addition, Schiffman says Prometheus likes the fact that the project has exterior private entrances such that it could easily be converted to condominiums, and that a second Tacoma Narrows Bridge, currently under construction, will significantly enhance the project’s accessibility. A Prometheus executive was unavailable Wednesday for comment.CMRE, along with long-time partner Paul Challancin of Monroe, WA, built the bulk of Cliffside between 1995 and 1996. The partnership purchased Cliffside, originally a 54-unit complex on four acres and 10 adjacent undeveloped acres, from the foreclosed property portfolio of an Oregon Savings & Loan. Subsequently, the group purchased an additional 17.5 acres contiguous to the original site, which granted the assemblage more than 700 lineal feet of beachfront along the Tacoma Narrows.The partnership then received site plan approval from the Pierce County Planning Commission for the development of 225 new luxury apartment units, which included a renovation of the original 54 units. Cliffside was characteristic of the CMRE’s interest in value-added urban land plays. Schiffman says this focus also resulted in the land assemblage and re-zoning for Riverlofts in New York’s Tribeca neighborhood, and the same for the Greater Philadelphia World Trade Center, a 4 million-sf project currently under development.Schiffman tells GlobeSt.com that CMRE at one time had five properties in the Northwest and, having now sold all of them, is on the hunt for more Northwest assets. Schiffman says CMRE is generally an opportunity investor that goes after “deals that have some hair on them,” which is to say properties that are distressed for one reason or another. “Even in a good market, there is always some property that lends itself to this distinction,” he says.