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Sterling Equities Sells 368-Unit Complex

FEDERAL WAY, WA-The New York-based investor sells the Pheasant Run apartment community here for $25.5 million to Pacifica Cos. of San Diego, which has visions of accumulating some 2,000 units in the region.

By Brian K. Miller | Updated on April 13, 2005

FEDERAL WAY, WA-A 368-unit apartment community here changed hands last week for $25.45 million. Sterling Equities of New York sold the property to Pacifica Cos. of San Diego. Sterling Equities has been a net seller in the Puget Sound area while Pacifica is making its first acquisition in the region, according to the broker involved in the transaction. Completed in 1987, Pheasant Run sits on 15 acres off of 272nd Avenue, just west of Interstate 5 in the southwest corner of King County. The development consists of 37 two-story buildings. Common area amenities include a business center, indoor hot tub, swimming pool and fitness center. Based on in-place NOI, the capitalization rate on the investment is in the low-to-mid 5% range, according to industry sources.The unit mix is 48 studios (550 sf for $580 per month), 96 one-bedroom (650 sf), 192 two-bedroom units (850 sf-950 sf) and 32 three-bedroom units (1,150 sf). The gross in-place rental rate is $0.96 per sf per month, with the effective rent being closer to $0.92 per sf. Unit amenities include fireplace, walk-in closets, vaulted ceiling, Washer and dryer, garbage disposal, and hook-ups for cable television and high-speed internet.Kenny Dudunakis of Hendricks & Partners in Seattle brokered the transaction. He tells GlobeSt.com that Sterling has been selling its Puget Sound properties lately and has just a couple of properties left in the region. Pacifica Cos. is mainly coverts apartments into condominiums, but doesn’t believe that is at the top of the list for Pheasant Run.Pacifica Cos. acquisitions director Andy Pollin tells GlobeSt.com that he wants to accumulate about 2,000 units in the region because he likes the prospects for job growth in the region. He describes Pheasant Run as a rehab play. The property last traded hands in 1998 for $18.6 million. It also traded in 1995 for $14.4 million.

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