Kendall is the best-built property we've looked at, and the least stabilized. It's four residences in Crown Point, about two blocks from Sail Bay and Crown Point Park: a new front building with the flagship penthouse and a second front unit, and a renovated rear duplex over four private garages with EV charging. Thermador appliances, Brizo fixtures, walnut and white-oak cabinetry, quartzite, Mitsubishi in-ceiling air, solar, and a rooftop deck on the flagship with a hot tub, a cold plunge and views of the bay. Construction finished in early October. Day one, there's nothing to fix.
The asking price is $5,450,000, down from $5,880,000. That's $1,362,500 a unit and $1,278 a square foot. On CBRE's rent roll of $30,250 a month, with 5% vacancy, my expenses and taxes reset to the price, it returns at the ask. The offering says 4.72%, on 3% vacancy and 4% management, with no water and no reserves.
I spoke with Aurmon Banitaba this morning, and the rent roll isn't what it looks like. Only the two rear units are leased to unrelated tenants, at $5,750 and $6,000. They leased within 24 hours and both tenants want to renew. That's $11,750 of the $30,250. The $11,000 flagship is the owner and his parents, who may move in. The lower front unit leased at $8,000, lost its tenants when the certificate was delayed and is vacant, with interest at $7,500, some of it family. With the front units at my market, $8,500 and $7,500, the building returns at the ask.
The seller's position is clear. He won't entertain anything under $5,000,000, he's likely to counter above it, and he'd welcome a close before year-end. A 1031 buyer with about $5 million in cash from a Portland office sale toured last Friday and may write. Speculation: that buyer is pricing a quiet, new building, not your yield, and is the one we're competing with.
The sales and the income support $4,900,000 to $5,250,000, and my most probable purchase price is $5,100,000. You told me you want stabilized, low-headache income. Half of this rent roll is a family lease and a vacancy, so the price only works with the income locked in. My recommendation is to offer $5,000,000, his floor, and plan to land at or near it, on these terms:
- Front units leased before you remove contingencies. 12-month leases you approve, at market or better, with full deposits. If the owner's family takes the flagship at $11,000, it's a 12-month lease with a deposit, not a handshake.
- Estoppels from all four tenants. Plus the rear tenants' move-in dates and renewals.
- The certificate of completion and finaled permits, and the legal unit count, since the county still shows three units.
- A close by December 30. That's what he values, and a financed buyer can deliver it.
At $5,000,000 the building returns on the rent roll. On the terms in U.S. Bank's October 29 letter for Bayard (6.785%, 30-year amortization, 1.25× coverage), the loan sizes to about and you'd need about beyond your $2,350,000. If the bank underwrites the two front units at market instead of $11,000 and a vacancy, the loan drops by about $250,000 and you'd need about $444,000 more. Your funds cover a purchase up to about , or about $4,608,000 at market rents. One option worth asking U.S. Bank about: a four-unit qualifies for residential one-to-four-unit loans that underwrite your income instead of the building's coverage.
Here's the bottom line. It's a beautiful asset with a thin yield, and today it's only half leased at arm's length. Bacon gives you a better yield, real tenants and money left over. I'd tour Kendall this week and write at $5,000,000 only with the front leases as a condition. If the seller won't lease up the front units, I'd let the 1031 buyer have it.
With Gratitude,
![Kip Boatcher signature]()
Bacon, Hornblend and Bayard figures are from their Briefs (November 6, November 2 and November 2). Kendall figures use my underwriting and the loan U.S. Bank's October 29 terms size on this building's income, with 0.5% closing costs. Needs verification