SMARTCAP Research - September 2019 Newsletter

SMARTCAP Research is a new monthly newsletter for our investors. It will share important articles and real estate news that influence our investment strategy, in addition to updating you on SMARTCAP's latest offerings and company news.

SMARTCAP Value Fund 2 is open for investment through the end of the year, so if you've considered increasing your investment or would like to become an investor, now is a great time! To learn more about Value Fund 2, visit the investment page. Additionally, we will be announcing a new Opportunity Zone project in the weeks ahead and will keep you updated as more information is available.

Facebook leases space in Bellevue's growing Spring District

520 Corridor

The proximity of the newest Facebook building to SMARTCAP Value Fund 2’s Evergreen building will increase its value and desirability. This is a great example of why the 520 Corridor is one of the hottest and fastest growing areas in the Seattle commercial real estate market.

TA Realty Sells $1B of Industrial to Blackstone


SMARTCAP's strategy is to compile a portfolio of high quality industrial property in the greater Seattle market. One potential exit is to sell the entire portfolio to a REIT, similar to how TA Realty sold an 8.3 million SF portfolio to private equity firm, Blackstone. Investors in our next Opportunity Zone Fund will have the opportunity to participate in this strategy.

The Amazon Effect on Excise Tax

Industrial investments

Thanks largely to Amazon, Seattle is now considered to be the top primary market for West Coast real estate investments. While East Coast cities used to be the standard in which deals were compared, Seattle is now a reference point in which other major cities compare how deals are structured. One thing Seattle will most likely follow, though, is New York's market standard approach to real estate taxes. Traditionally, payment of the real estate excise tax in Seattle has been a seller's expense, but with real estate excise taxes set to drastically increase in 2020, sellers may ask buyers to split the cost. Giving the sellers the ability to change the market standard for cost allocation shows the strong desire to invest in Seattle and demonstrates yet another cost of the competition in the Seattle commercial real estate market. In underwriting projections SMARTCAP conservatively models that the full excise tax is paid by the seller at disposition in the future, allowing for additional upside if the market continues to move towards split costs.

TAGS: Musings