The Kensington Townhome offering consists of a heavy value-add 32-unit complex in Thurston County’s Tumwater submarket.
Owned by the original developers, Kensington Townhomes was constructed between 2005 – 2007. The complex consists of 32 townhomes style units spread throughout duplex and triplex layouts. All 3-bedroom 2.5-batroom units at 1,300 SF with garages, and original interiors ripe for renovations. Centrally located off Trosper Road, Kensington Townhomes sits 1/2 mile east of I5 and four miles south of Downtown Olympia. Kensington was being offered to investors as a true value-add deal with $600/unit achievable rent premiums post-renovation.
Due to Kensington’s tremendous upside, the KM team listed the complex at a compressed capitalization rate of 4.88% and total price of 8.6MM. Tumwater’s relatively quiet investor history caused a lack of comparable sales and rents to justify the blue sky that was being offered to investors. As a relatively untapped market, proving the post-renovation rent ceiling was the key to success in generating credible investor interest. An additional challenge: COVID-19 and the Washington State Eviction Momentum created concerns of future rent increases.
The KM team worked diligently in generating interests and ultimately providing ownership with a handful of offers to review. In the end, a growing Tumwater market saw the Kensington Townhome complex close at list price (8.6MM) setting new market standards for cap rate and price per door. Kensington Townhomes was purchased by a well-known investment firm that specializes in value-add deals in suburban markets across the nation.