July 13, 2022

135 Issaquah units sell for over $103M to Seminole sovereign wealth fund

Photo by Kidder Mathews [enlarge]

The deal was worth about $767,518 per unit.

The fairly new Alexan Heartwood, at 1150 10th Ave. N.E. sold last week for over $103.6 million (allowing for a small personal property deduction), according to King County records. The seller was an LLC associated with Trammell Crow Residential, which began construction on the seven-story, 135-unit project circa 2018. It was completed last summer in the Issaquah Highlands.

The buyer was SemREF Kirkland LLC, associated with the Seminole Tribe of Florida's Sovereign Wealth Fund, which now lists the property on its website. Public records indicate an over $51.8 million loan from Northwestern Mutual Life Insurance.

Cottonwood Residential, a multifamily REIT based in Salt Lake City, is now the manager for what's been newly dubbed Alton Heartwood. Cottonwood is evidently part of the Heartwood ownership, and on its website also describes it as a new acquisition.

Dylan Simon, Jerrid Anderson and Matt Laird of Kidder Mathews brokered both sides of the deal, which was worth about $767,518 per unit. That appears to be a record for Issaquah apartment sales. Heartwood is a virtually brand-new midrise building, but that price-per-unit figure rivals or exceeds that of some new-construction high rises in downtown Seattle or Bellevue.

Simon said in a statement, “This pricing is reflective of buyers in our marketplace recognizing the quality of Heartwood apartments and the strength of both the Issaquah submarket and Pacific Northwest apartment market as a whole.”

CBRE says Heartwood was stabilized early this year. Cottonwood does lists some current or pending vacancies.

Cottonwood says that units run from 552 to 1,494 square feet, ranging from one- to three-bedrooms. Amenities include a pool, “outdoor sky lounge,” gym and bike repair area. Two levels of structured parking have 204 stalls.

Rents aren't quoted on the new leasing website. Under TCR's ownership, last summer, rents ranged from about $2,000 to $5,300 a month.

The Seminole Tribe's two-year-old real estate fund (SemREF) lists seven multifamily investments to date, including Heartwood — its first deal in our region. That portfolio now totals 1,215 units. The fund's stated goal is “to invest in stabilized Class A multifamily assets featuring best in class amenities located both in urban and suburban core markets.”

The Seminole Tribune wrote two years ago that, until 2020, its “wealth fund has received most of its revenue from casino properties, but after extensive research and deliberation, it was concluded that commercial real estate is the next advantageous, conservative opportunity for tribal investment.”

Coinciding with its first multifamily investment in Dallas, also in 2020, the tribe said that it was “taking its first steps in diversifying its sources of revenue.”

Back here in the Pacific Northwest, the last recorded land sale for the 2.2-acre site, aka Block 19 at Issaquah Highlands, was for $5 million in 2008. The owners were then Sumitomo Forestry America and BDR Homes. Trammell Crow Residential says it acquired the site in late 2018.

The project began life as Alexan Highlands. Clark Barnes was the architect, and Katerra the builder. TCR's team also included Communita Atelier, landscape architect; and Core Design, civil engineer.