November 04, 2020
A joint venture American Capital Group and Artemis Real Estate Partners has closed on the acquisition of Lifebridge Kirkland Apartments. The JV bought the 409-unit project in the Totem Lake area from construction technology company Katerra.
Katerra on Tuesday said it has always planned to sell a large apartment project under construction in Kirkland, and that things are going well for the tech-driven offsite construction company despite growing pains.
This week, Bellevue-based American Capital Group (ACG) and Artemis Real Estate Partners of Maryland said their joint venture has closed on a deal to buy from Katerra two Northwest multifamily projects totaling 761 units.
ACG President B.J. Kuula said Katerra has been hired to finish both developments.
The Wolff Co. launched development of both projects, which Katerra took over after Spokane resident Fritz Wolff co-founded Katerra five years ago. It's working to revolutionize the building industry, which hasn't seen productivity rates increase since World War II.
In December, Wolff stepped down from the Katerra board to concentrate on other professional pursuits, but would remain a shareholder, the Spokane Journal of Business reported.
Another leadership change came in the spring, when Katerra CEO and co-founder Michael Marks stepped down and was replaced by the Katerra's chief operating officer, Paal Kibsgaard.
He is the fourth CEO of the Menlo Park, California-headquartered company, which is backed by SoftBank and reportedly worth $4 billion.
Katerra has around 8,000 employees in offices around the world, including in Seattle, and automated precast concrete factories in India and the Middle East.
It operates a cross-laminated timber factory in Spokane Valley and a Tracy, California, facility that manufactures wood-framed walls, trusses, cabinets and windows. The factory will produce the equivalent of 12,500 multifamily units a year, according to Katerra.
In addition to turnover in the C-suite, the company has had rounds of layoffs affecting around 7% of its employees.
Katerra sold the 409-unit Lifebridge project at 11725 N.E. 118th St., in the Totem Lake area of Kirkland for $56.7 million, according to a sales affidavit that King County recorded earlier this fall. That works out to $138,630 per unit for the development, which is expected to be completed next spring.
For comparison, a finished new apartment building in Redmond recently sold for $417,721 a unit. Investors are eager to be on the Eastside, where tens of thousands of new tech jobs are expected to materialize in the coming years at Amazon, Facebook, Google and Microsoft. "This transaction represents a rare opportunity to acquire well-located and high-quality projects at attractive prices," Kuula, the ACG president, said in a press release.
He declined to say how much the joint venture paid for the second project, the 352-unit Amberglen in Hillsboro, Oregon, which is home to IBM, Intel and Nike offices.
The sale of the projects does not signal distress at Katerra, according to the company.
Selling was "a long-planned outcome," company spokesperson Trevor DeWitt said in an email. He noted the company, with residential projects totaling over 5,600 units, is a National Multifamily Housing Council 2020 Top 5 Builder. In the Pacific Northwest, Katerra has over 1,750 units under construction.
Katerra was recently named the general contractor of a 1,550-bedroom student housing tower project in Seattle's University District.
Katerra was the design-builder of the five-story Catalyst Building, which opened in September in Spokane. Seattle-based McKinstry developed Catalyst, one of the first zero-carbon buildings certified by the International Living Future Institute. Cross-laminated timber from Katerra's factory was used in the project