Acquisition Strategy: Consider the Entire Life Cycle and Think Outside the Box
- 92 Units
- Year Built: 2008
- Year Acquired: 2009
Domaine, a failed-condo project, was a departure from Alliance’s typical acquisition target. However, we saw considerable potential for conversion, given the community’s central location among Seattle’s hippest neighborhoods, proximity to Lake Union and unique floor plans with condo-grade finishes. After careful evaluation, Alliance took the challenge of acquiring one of the first deals converted to rental in the marketplace.
The Goal: Convert and rebrand as for-rent, and overcome the stigma associated with the community as a failed-condo project by positioning it as a natural fit for residents accustomed to a higher standard of living who also desire the convenience of leasing.
The Work: At the time we acquired Domaine, interest in financing was very low, requiring us to close the deal all cash and put financing in place post-closing. Then, during one of the most difficult real estate markets in recent history, Alliance began the process of conversion while still maintaining the individual unit mapping. We also took advantage of an opportunity to incorporate amenity spaces by repurposing three live/work units — this was key to the success of the project, as it appealed to our target renters’ desire for luxury apartment conveniences.
The Results: Three years of successful rental operation later, Alliance sold Domaine for one of the highest per-door prices ever achieved in Seattle for a property without a commercial component. At the time of sale, Domaine was averaging rents of $2.47 per square foot — 10 cents more than the average for the downtown/South Lake Union/Belltown submarket.