Return-to-office mandates from companies like Amazon have spurred strong absorption in tech hubs on the West Coast this year. Landlords aren’t the only ones taking notice of this trend. So are buyers.
Last week, Kennedy Wilson’s investment management platform announced the acquisition of The Danforth in Seattle for $173 million. In the news release publicizing the purchase, William McMorrow, chairman and CEO of the Beverly Hills, California real estate investment company, noted return-to-office mandates as a tailwind in the city.
“The Danforth provides an opportunity to acquire a recently built community at a discount to replacement cost within an area experiencing limited new construction and strong absorption due to recent return-to-office initiatives from leading technology employers,” McMorrow said.
Kennedy Wilson partnered with two Japanese investment firms — Kenedix Inc. and Hulic Co., Ltd. — to acquire The Danforth, a 265-unit property with Whole Foods as the sole ground floor tenant.
Kennedy Wilson has a 10% interest, investing $6.6 million of equity in the property. The firm will serve as the partnership's asset manager and will earn customary fees.
“Given our 30-year history in Japan, we are proud to continue the growth of our investment management platform alongside these two prestigious companies that are aligned with our investment strategy and our focus on delivering quality housing within growing Pacific Northwest markets,” McMorrow said.
With the acquisition of The Danforth, Kennedy Wilson has more than 13,000 market-rate and affordable apartment units in the Pacific Northwest.
The 16-story building, built in 2018, features one-, two- and three-bedroom layouts. Its amenities include a Studio Fit fitness center, rooftop solarium and dog run, resident lounge with shuffleboard and media center, full demonstration kitchen and BBQ patio with multiple grills.
The Danforth is located in Seattle’s First Hill and Capitol Hill neighborhoods, which boast plentiful restaurants, nightlife and large employers.
Kenedix Inc. and Hulic Co., Ltd. aren’t Kennedy Wilson’s only Japanese partners. In April, it launched a new real estate investment platform to provide preferred equity and mezzanine capital for multifamily and industrial sponsors in the U.S. with Tokyu Land US Corp., a subsidiary of large Japanese real estate developer Tokyu Land Corp.
Kennedy Wilson and Tokyu will target over $200 million in preferred equity investments and mezzanine loans to sponsors across multifamily and industrial projects nationwide. The platform’s target investment size will typically range between $10 million and $50 million.
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