Essex and SWIB Form Apartment JV with $660MM of Buying Power

Essex Properties Trust, Seattle, Snohomish, Mill Creek, Lynnwood, South San Francisco, San Mateo, State of Wisconsin Investment Board, Wesco VI, San Francisco, Bay Area
Photo by Juan Manuel Núñez Méndez on Unsplash

By Jon Peterson

San Mateo-based Essex Properties Trust and the State of Wisconsin Investment Board has formed a new apartment investment joint venture that will allow the relationship to invest in apartments on the West Coast with a total capitalization of $660 million, according to a statement made by Essex in its third quarter 2021 earnings report.

SWIB and Essex will each invest $150 million of equity into the joint venture that goes by the name of Wesco VI. Both of the investors will own a 50 percent stake in the relationship. The investment strategy will be to acquire or develop apartment assets on the markets where Essex is currently active. This would include Seattle and the San Francisco Bay Area.

Essex has already put some of the capital to work with two transactions in the greater Seattle market where it acquired two assets totaling 294 units in Snohomish County where the total purchase price was $108 million, according to public records.

One of the properties was the $55 million purchase of the 139-unit Monterra Apartments in Mill Creek. This asset is located at 13401 Dumas Road. The other property was the $53 million acquisition of the 155-unit Martha Lakes Apartments in Lynnwood. This complex is located at 16626 Sixth Avenue.

Essex now holds a sizeable portfolio in the greater Seattle market. Its portfolio in the region now totals 10,218 units, which accounts for 18 percent of the year-to-date net operating income of the company, as stated in the third quarter 2021 earnings report. The Seattle area assets for the company has seen a very slight increase in the financial occupancy over the past 12 months. Year-to-date occupancy in 2021 is 96.4 percent as compared to 96 percent for the same time period in 2020. The average monthly rental rate for the Seattle portfolio dropped by 2.2 percent from $1,938 to $1,896.

Essex has made one other acquisition during the third quarter of this year. It paid $33.5 million to acquire 7 South Linden in South San Francisco, according to the public REIT. This property is a commercial asset that is fully leased to two tenants. Essex is presently pursuing entitlements to construct an apartment complex on the property in the future. It did not indicate the number of units that are planned for the future development.

West Coast Commercial Real Estate News