Mill Creek Residential Trust

Specialty: Real estate development and construction
Management: Charles R. Brindell Jr., CEO; Michael A. Collins, executive managing director — West; William C. MacDonald, executive managing director — East; Mark R. Dempsey, CFO; Michael Melaugh, executive managing director — National Capital Markets; (regional) Sean G. Hyatt, managing director — Pacific Northwest
Founded: 2010
Headquarters: Dallas, with 13 regional offices
Employees: 133
Current projects: Savier Street Flats, a 179-unit mixed-use development in downtown Portland just starting construction; Dunn Loring, a 15-acre transit-oriented development in Virginia with 628 apartments, 65,000 square feet of retail and nearly 2,000 parking stalls


Image courtesy of Mill Creek Residential Trust/SERA Architects
Construction is starting on Savier Street Flats in downtown Portland, with its 179 apartments expected to open in early 2013.

In 2010, a group of former Trammell Crow Residential executives started a new company called Mill Creek Residential Trust to develop and acquire multifamily properties in core markets, including Seattle and Portland.

Mill Creek and Rockwood Capital later formed a new joint venture to invest in development, construction and acquisitions across the country. The partnership includes a $214 million investment by Rockwood and Crow Holdings.

Rockwood is a real estate investment firm. Crow Holdings owns and directs investments for the Trammell Crow family and its partners.

Mill Creek is based in Dallas. Sean G. Hyatt is the Bellevue-based managing director of the firm’s Pacific Northwest division.

Apartments

Hyatt said Mill Creek will have started building 3,100 apartment units in seven projects across the country by year’s end, including Savier Street Flats, a 179-unit mixed-use development in the Northwest neighborhood of downtown Portland. It plans to soon begin building that SERA Architects-designed project. Hyatt said vacancy is 3 percent in that neighborhood and rents are rising.

The firm plans to begin construction on 4,000 apartment units in about 15 projects next year. Among them is a 118-unit complex at 3636 Stone Way N. in Wallingford, assuming all goes well with the due diligence. Public records show Mill Creek has not yet acquired the property.

The firm operates on the East, West and Gulf coasts and in Denver, specializing in high-barrier-to-entry, 24-hour gateway cities with job growth and positive in-migration, including Seattle, New York and Boston. Hyatt said Mill Creek has local expertise that attracts investors to its projects, and it is an equity investor in all its deals. Its investment partners are focused on highly walkable neighborhoods with shops, restaurants and entertainment, such as Capitol Hill, South Lake Union and Queen Anne, he said.

Mill Creek expects to close on two apartment development sites in Seattle next year and one in the more traditional suburban areas of west King County or south Snohomish County, places that provide a “commuting alternative to living in the city,” Hyatt said. It will construct seven-story buildings in Seattle and suburban garden-style apartments in the outlying project.

Looking for fixers

Hyatt said there’s a trend toward smaller apartment units in reaction to high land prices at the end of the last development cycle. Twenty-somethings are willing to live in smaller apartments so they can live large in their 24-hour neighborhoods and pay cheaper rent, he said.

Hyatt said Mill Creek is “right-sizing” its parking in new in-city projects as lenders get more comfortable with less than one-to-one parking.

On the acquisition side, the firm is less interested in buying the now-costly Class A apartment properties than distressed units or older ones it can fix up, he said. It is looking for those deals on the West Coast and in the Southwest.

“We’re more interested in what few broken condos are out there or in value-add opportunities,” he said. “I would say in Seattle (most of) those opportunities were gone at the beginning of the year.” Hyatt sees a “great” three- to five-year run for apartments in Seattle. While a number of developers have announced plans for new apartments, Hyatt said supply should be kept in check as not all likely will get built.



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