The Stillwater Apartments offering consisted of a best-in-class mid-rise located in Tacoma’s most coveted location, the Stadium District.
Constructed in 2005, this 26-unit sits just off Tacoma Ave and 4th– walking distance from UW Tacoma, Wright Park and Tacoma’s CBD. After representing the purchaser in 2016, ownership retained Ted Sipila and Austin Kelley (Kidder Mathews Team) in 2019 on how best to market, price, and sell this trophy asset.
The History
Truly irreplaceable product in an extremely desirable location, The Stillwater Apartments consisted of a diversified units, original interiors ripe for renovations, water/mountain views, two-story underground garage parking, and spacious floor plans. Stillwater offered immediate value-add potential that included; utility bill-back, charging for secured parking, raising rents to market, and updated interiors. With heavy value-add potential across the board, Stillwater was offered to investors as a stable investment with tremendous upside at 4.24% capitalization rate on current numbers.
The Challenge
Due to a compressed capitalization rate, lenders struggled with debt-service coverage ratio (DSCR). The uncertainty in projected upside created questions of a higher down payment, interest rate premiums, and reserve accounts requirements for buying entity. With the help and support from the KM team, ownership and the perspective buyer were able to agree on a top-of-the-market strike price.
The Results
The KM team worked diligently to provide the lender will all the data and market knowledge to prove the tremendous upside as advertised. In the summer of 2019, the Stillwater Apartments closed for 26% more than ownership bought the complex for just three years prior. Trading at cost of new construction numbers, Stillwater set new market standards for price per door and cap rate. Both the buyer and seller are extremely well-positioned for continued success in the multifamily industry.
