(To read more on the multifamily market, click here.)
KIRKLAND, WA-The 84-unit Kirkland Gardens West apartment complex here has changed hands for $14.68 million, or $175,000 per unit. The new owner is Jeff Wysong of Seattle-based Wysong Capital Corp., which plans to convert the property to condominiums.
Kirkland Gardens West is located south of Central Way (NE 85th St.) and north of Kirkland Avenue, the main routes running to and from Interstate 405 and the Kirkland waterfront. The garden-style property consists of two-bedroom units averaging 900 sf. It was developed in 1985 and is currently 95% leased.
Kenny Dudunakis, the Hendricks & Partners broker that sold the property, tells GlobeSt.com that the purchase price would translate to a capitalization rate of 4.25% if the complex were to remain apartments. For Wysong, the cap rate doesn't matter; what matters is how much he can re-trade the units for to individual buyers.
If that number is $300 per sf, or $270,000 per unit, Wysong will sell off the units for $22.68 million for a gross profit of $8 million, or 54.8%. After deducting for renovations, sales commissions and insurance, converters generally hope for a net profit of between 25% and 40%.
Dudunakis says Kirkland Gardens is the fifth apartment property Wysong has acquired this year for conversion. Some of those properties include the Windsor, located on the south slope of Seattle's Queen Anne neighborhood; the Newport, on Greenwood Avenue in Seattle; and the Saxony, in Sammamish, WA. Wysong could not be reached Tuesday afternoon for comment on his success in re-trading the properties, but Dudunakis says the properties are "selling out quickly."
For Kirkland, it is the second significant acquisition by a converter in the past few months. In September, a joint venture of Bellevue-based Continental Properties Inc. and Palo Alto, CA-based equity partner Broadreach Capital Partners LLC paid $66.8 million or $373,000 per unit for the 179-unit Carillon Heights apartment community that overlooks the waterfront.
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