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Seattle Investor Deepens Foothold in Suburbs With $290 Million Portfolio Deal

Security Properties is sinking big-city money into recently completed apartment properties in the Puget Sound region's suburban fringes, another sign that the company sees growth potential outside the urban core.

The Seattle-based investor said it paid about $290 million for a 720-unit portfolio of three multifamily properties completed in 2020: one in Everett, a city 20 minutes north of Seattle; another in Edgewood, just east of Tacoma, about 30 miles south of Seattle; and a third in Lacey, a suburb of the state capital, Olympia, that is about 60 miles south of Seattle.

The purchase is part of Security Properties' strategy to target "higher quality, newer assets in secondary locations that have historically been under-supplied," rather than those in the urban core, Davis Vaughn, a senior director at the firm, said in a statement.

County documents identify the seller of the properties as developer Wolff Co., of Scottsdale, Arizona. Wolff Co. representatives did not immediately respond to inquiries from CoStar News. According to sales records, Security Properties paid $122 million, about $423,611 per unit, for the 207 East Apartments in Edgewood, a cluster of three-story buildings at 207 Meridian Ave. E with 288 units. Security Properties paid $76.8 million, roughly $399,740 per apartment, for Helm, a 192-unit development at 128 127th St. SE in Everett.

Both sold for significantly more than the $331,000 average per-unit price for multifamily properties in the Puget Sound region, according to CoStar Analytics.

The third property, Martingale, is a 240-unit complex at 8675 Litt Drive SE in Lacey, a small city on the east side of Thurston County on the southernmost shores of Puget Sound. The region was distinct from the Seattle metropolitan area for much of its history, but in the last five years, mounting land costs have pushed developers ever farther into Thurston. Much of that new construction has focused on large industrial projects, such as plans for a $160 million Costco distribution center unveiled in September.

 Vaughn said in an email that Security Properties paid $92 million for the Lacey property, roughly $383,333 per unit.

The acquisitions were backed by two major institutional investors. New York-based private equity giant Blackstone Group was a joint venture partner in the acquisition of the Everett and Edgewood properties, and Toronto-based multinational investor BentallGreenOak was part of the joint venture that purchased the Martingale in Lacey.

Security Properties, a real estate investment, development and operating company, has 131 properties totaling roughly 28,000 apartments in its portfolio. In addition to its Puget Sound holdings, it owns property in California, Colorado, Nevada, Utah, Arizona and Oregon. The company also put down roots in the South and on the East Coast in recent years, adding properties in Nashville, Tennessee, western Pennsylvania and the Washington, D.C., area.