Case Study – Greenlake 7 Units
Key Deal Points
- 6542 4th Ave NE
- $2,220,000
- 43% Vacant at Closing
- 11 offers received
- Non-Contingent at Mutual Acceptance
- Maximized terms and secured surety of close for client
We were very pleased – in all respects – with Daniel and Lee & Associates’ performance on our transaction. Everything happened just the way and on just the timeline they said it would. They also stayed involved, helping us clean up details, long after closing. We sincerely appreciated their professionalism, transparency, reliability, encouragement, and responsiveness.
- Barb C.
For more information regarding this case study, please contact:
Candice Chevaillier, CCIM
Principal
D (206) 773-2694
cchevaillier@lee-associates.com
Daniel Lim
Vice President
D (206) 773-2692
dlim@lee-associates.com
Dea Sumantri
Associate Vice President
D (206) 773-2680
dsumantri@lee-associates.com
Chris Larsen
Associate
D (206) 773-2695
clarsen@lee-associates.com
Challenge
The Joseph Apartments was held in the Seller’s family for multiple generations. Preparing for retirement and living in three separate states, the Sellers were looking forward to stepping away from active management and simplifying. Well-maintained, the building was ideally located just two blocks from Greenlake. Several family members lived on-site and planned to move out at sale, which would leave three units vacant. The remaining units were leased at below market rents. These factors combined with a deteriorating interest rate environment presented potential hurdles for buyers to overcome. Additionally, having self-managed the building throughout their course of ownership, the Sellers had established close relationships with their tenants. It became clear, a team that would be sensitive to the unique landlord-tenant relationship during a period of significant change was necessary.
Action
The Lee & Associates Multifamily Team saw the vacant units as a marketingopportunity. With units available at closing, investors had the opportunity to begin renovations and establish market rents on nearly half the rent roll on day one, avoiding lengthy notice periods and the City of Seattle's Tenant Relocation Assistance Ordinance requirements. The Team presented the vacant units as a pathway for investors to significantly shorten their timelines to achieve Pro Forma returns. The Team sourced lenders who could provide financing based on Pro Forma returns to further encourage investors to engage in the asset.
Cognizant of the close relationship between the seller and tenants, the Team utilized the owner-occupied units to tour interested buyer groups. In doing so, the Team reduced the impact of the marketing process on the tenants and allowed buyers the opportunity to familiarize themselves with the asset’s condition and make informed assumptions in their offers.
Result
On bid day, the team presented 11 offers to the client. With the number of competitive offers received, the Team recommended a best and final round that would provide a full-access walkthrough to the top three groups. With this access, buyers were asked to validate their assumptions and revise their offers to reduce contingencies and sharpen pricing. Ultimately, the winning offer provided strong proceeds and was non-contingent upon signing, Removing the factors of additional tenant disruptions and the uncertainty of the debt market from the transaction. The Team secured this win through fully exposing the asset in a clear and comprehensive presentation which highlighted the unique opportunities the investment offered. The client was now free to focus on enjoying retirement.