$100M Tri-Cities Apartment Portfolio Comes to Market

SEATTLE-Robert Young & Associates is looking to sell its 1,216-unit Tri-Cities apartment portfolio. The 1.11-million-sf, seven-building package is being offered at a relatively high 6.4% capitalization rate, according to one of the listing brokers, Greg Laycock of Cushman & Wakefield in Seattle.The cap rate translates to a purchase price of $97 million. Local brokers familiar with the portfolio tells GlobeSt.com that if there are multiple bidders, the sale price could top $100 million, which would be slightly more than $82,000 per unit. Offers are due by Aug. 15.The buildings are located in neighboring Central Oregon cities of Pasco, Kennewick and Richland. Built between 1968 and 2004 and raging in size from 98 to 286 units, Laycock says most of the properties within this portfolio can be purchased individually or in combination with one or more of the others. “We will review offers as they come in,” says Laycock, alluding that someone could come in, bid high and tie it up early. “I’ve already received an overwhelming interest from both institutional and entrepreneurial players in receiving additional information.”The seller, Robert Young, is in his mid 70s and is one of the dominants developers in the Tri-Cities market. Laycock says he decided to sell for multiple reasons, not the least of which is his desire to do some estate planning. In addition, Laycock says he wants to take advantage of how well the properties are doing in the market, investor demand and the low debt pricing that has been netting sellers better prices.Local brokers tell GlobeSt.com the properties are well built and well maintained. Five of the seven properties are located in Richland, which is home to the Hanford Nuclear Reservation Environmental Cleanup project and the Pacific Northwest National Laboratory, a Department of Energy Office of Science laboratory that provides key support for the Hanford cleanup efforts. The newest property, Broadmoor, was completed in 2004 and is 60% leased. The asking price for the 252-unit property is $25 million, which translates to $99,206 per unit, $100.99 per sf and a pro forma cap rate of 6.45% cap rate. All of the other properties are between 94% and 99% leased. The oldest property, Jadwin Stevens in Richland, has 132 units and is 96% leased. It is being offered at $6.1 million, which translates to $46,212 per sf and a 6.49% cap rate based on in-place numbers.The most expensive property in the portfolio is the Villas at Meadow Springs, a 286-unit property in Richland that was built in 2003 and is 94% leased. The asking price is $32.05 million, which translates to a per unit price of $112, 063 and a 6.4% cap rate.The two properties that must be purchased together are Washington Square I and II. One was built in 1979 and the other in 1994. Both are 99% leased. The asking price for the pair is $18.65 million, which translates to $74,008 per unit and a 6.5% cap rate.Some of the properties have condo conversion potential. One is Tapteal on the Columbia, a 98-unit property built in 1977 on the Columbia River. The asking price is $6.4 million, which translates to $65,816 per unit. If it were kept as an apartment complex, the cap rate would be 6.55%.The last property in the portfolio is the Highlander, a 196-unit property in Kennewick that was built in 1979 and is 95% leased. The asking price is $8.75 million, which translates to $44,643 per unit and a 6.05% cap rate.Laycock says the Tri-Cities Apartment market has stabilized after two years of experiencing an exodus of renters to home ownership. “The diversity in the region is steadily growing to include not only the energy and agriculture industries, but also the wine and retail industries,” Laycock says. “This diversity combined with the continued economic growth in the Tri-Cities area is creating a destination location.”