Kennedy Wilson KW announced the acquisition of Atlas — a wholly-owned 343-unit residential complex in the Seattle suburbs of Issaquah, WA. The real estate company shelled out $135 million for the buyout.
The purchase is a strategic fit for the company, which is eyeing expansion opportunities in Washington. In fact KW has expanded its Washington multifamily asset pool to more than 10,000 units.
KW has undertaken an interest-only loan of $84 million for a 10-year period. The debt carries an interest rate of 3.86%. It has funded the remaining portion of the consideration with its own equity worth $52 million.
The community consists of five mid-rise buildings and incorporates a mix of studio as well as one- and two-bedroom apartments. These units range from 513-1,239 square feet. The community boasts a fitness and exercise center, a lounge and a well-furnished courtyard, among others.
Its close proximity to a 512-acre waterfront state park, which is anticipated to witness remarkable job growth over the next decade, makes the acquisition a strategic fit. The realty is situated near the employment hub of I-90 that houses prominent employers like Microsoft, Siemens and T-Mobile. It is also a few minutes away from the employment center in Seattle.
In fact, with sound connectivity to major employment centers, as well as presence of upscale retail outlets, like Starbucks, Safeway and Targetin the neighborhood, these properties will likely hold significance for educated and high-income customers.
KW used the proceeds from the sale of its wholly-owned 615-unitresidential community, Summer House in Alameda, CA. In fact, the Atlas acquisition was one of the four properties purchase through the 1031 exchange. This entitled the company to defer capital gain taxes. Moreover, this transaction will enhance the company’s portfolio with comparatively newer properties, like Atlas.
Per management, the company remains focused on realizing opportunistic investment across Seattle and hence, this property located in the eastside submarket offers ample scope for growth. It also reaffirms KW’s strategy to upgrade its portfolio quality as well as expand its footprint in desired markets.
KW acquired a 573,000 square foot office campus in Issaquah earlier this year. Hence, with the aforementioned transaction, the company is fortifying its presence in the Issaquah area.
Also, shares of this Zacks Rank #3 (Hold) company has underperformed the industry year to date. While the stock declined 5.1%, the industry recorded growth of 16% during this period.