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West Willows

Located near the Microsoft campus in Redmond, WA, the West Willows Office complex was ideally positioned for successful investment: in a booming suburb of Seattle, surrounded by global tech headquarters and with a very positive in-place cash flow. SKB partnered with a NYC-based investment firm to purchase the property and proceeded to increase occupancy and operating income through new lease renewals and new leases across the 3-5 year holding period.

 

THE OPPORTUNITY

 

West Willows is a 162,000 SF, flex business park located near Microsoft’s global headquarters in Redmond, Washington. West Willows owns a strong location in the Redmond submarket and projects superior curb appeal.

SKB was attracted to West Willows due to its in-place cash flow, which exceeded a 9% annualized, cash-on-cash return at acquisition. In addition, the West Willows’ prime location within the Seattle/Puget Sound Metro made it a solid prospect for investment. That region was projected to experience higher than national-average job growth, fueled in part by technology giants Microsoft and Amazon.com and by other, major, Seattle-based corporations, such as Starbucks, Nordstrom and Boeing.

 

THE RESPONSE

 

SKB co-invested in the West Willows purchase with a leading provider and manager of alternative investment products, serving high-net-worth, private and institutional clients based in New York City. Our acquisition basis represented a greater than 50% discount to West Willows’ estimated replacement cost.

Thanks to its combination of a reduced basis, a strong location with superior curb appeal, pre-funded tenant improvements and highly competitive rental rates, West Willows was poised to capitalize upon a market cycle that continues to evidence signs of an energetic recovery. A reset basis with pre-funded tenant improvements positioned West Willows to achieve SKB’s operating goals, while offering highly competitive rental rates.

 

THE SUCCESSFUL RESULT

 

SKB gradually increased occupancy and net operating income through a combination of lease renewals and new leases across the projected, three- to five-year holding period. The sale of West Willows closed on March 31, 2015 at pricing in line with pro forma.

Overview

$

17.4

million

PURCHASE PRICE

$

6.9

million

TOTAL EQUITY

4

years

HOLD PERIOD

15.5

percent*

REALIZED IRR

*This overview does not necessarily reflect or predict the performance of any future transaction, or the actual performance of any other past transaction. The returns shown do not represent an overall track record, and returns and performance vary substantially transaction to transaction. In some cases transactions have resulted in the total loss of investment.

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