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Hangar 128

Everett, WA

Hangar 128

Overview

Location

Everett, WA

Acquired

2014

Units

223

Acquisition Price

$26,910,000

Capital

$11,000,000

Sale

$44,250,000

A TMR partnership acquired Hangar 128, formerly Lakes by Mill Creek, from a California investor who had spent near $1 million on roofs, new siding, exterior painting and other improvements before suddenly changing course and selling the property. Upon TMR’s takeover, none of the 223 apartment interiors, the large office and cabana, the swimming pool area or the spacious grounds and outdoor amenities had been updated since the property’s construction in 1986.

The owner placed the property on the market in October, 2013, which in our opinion, was an inopportune time to sell due to an as yet settled contract dispute between Boeing, the area’s major employer, and its largest worker’s union. At stake was a multi-billion dollar contract for the assembly of the next generation 777 jetliner. If the union negotiations failed, the assembly would take place in South Carolina, instead of Everett, Washington.  The union vote was to take place in January of 2014. By negotiating the sale of the property before the January union vote, prudent potential purchasers had no choice but to base their offers on the worst-case scenario where the union turned down Boeing’s offer and the 777 assembly moved to South Carolina. 

TMR, too, based its offer on a worse-case scenario. However, due to the high level of pre-diligence we had already completed, together with our familiarity with the location, we elected to write our proposal without any contingencies, including a significant non-refundable earnest money deposit. In the end, the owner accepted our offer, at what we felt was an outstanding price. Three weeks later, the union voted to accept Boeing’s contract for the assembly of the next generation 777 in Everett. Additionally, Boeing announced they would spend $1 billion on the construction of a new composite wing manufacturing plant, also at Boeing’s Everett facility. To say the least, the news was a home-run for the Puget Sound region and a grand-slam home run for TMR’s partnership acquisition of Hangar 128.

Since that time, TMR has completed an award-winning renovation and rebranding of the property as Hangar 128. The upscale interior renovations and vintage aviation theme we adopted was a big hit with renters. In less than 6 months our post-renovation rental rate targets were surpassed and by the end of 2016, the property’s net operating income had increased by a whopping 70%.

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