DK Equity closes its first two deals: 53 units in Central Washington

Welcome to the first edition of the DK Equity Monthly. Thank you for subscribing and for the support that got us here. The format will stay consistent: new acquisitions, updates on the existing portfolio, and a review of what is happening in Central Washington. We will keep it factual and we will show our numbers.

1. New Acquisitions

July was the month the DK Equity platform went from underwriting to owning. We closed our first two deals a week apart.

Campus Village Apartments, Ellensburg, WA (41 units)

On July 24 we closed on Campus Village Apartments, a 41-unit community at 925 E 18th Ave in Ellensburg, within walking distance of Central Washington University. The purchase price was $4.5 million, and the sale was arranged by Kidder Mathews. Roughly half the tenant base is CWU students, which shapes everything about how we operate this asset: leasing is seasonal, turnover is predictable, and the marketing battle is won or lost online before a prospect ever visits.

The equity subscription is complete and the renovation funding is secured. The value-add program is now moving, starting with the item below.

The washer/dryer program. The clearest near-term NOI lever at Campus Village is in-unit laundry, and this month it moved from plan to rollout. We are installing in-unit washer/dryers and offering them to tenants at $125 per month under a separate appliance services agreement, effective when the machines go into the unit. That structure keeps the amenity distinct from base rent, which remains governed by Washington's new annual cap (more on that law in the Quincy section below). Our added cost is roughly $20 per month per unit in utilities.

Early returns: within the first 24 hours of the offer going out, three tenants said yes and none said no, and responses are still coming in. At full participation the program, which we will be getting to in the coming 18 months, will add roughly $61,500 of annual amenity income across the 41 units.

Rent by room. We are also doing feasibility work on renting the 2-bed/1-bath floor plans by the room as units turn. Whole units currently rent around $1,000 for a 1x1 and $1,100 for a 2x1. If the market supports $700 to $800 per room on a furnished, all-in basis, a 2x1 produces $1,400 to $1,600 a month instead of $1,100, and that spread is the reason for the diligence. This is exploration, not a committed program. We will report results as we have them.

The Google problem. The property's Google Business Profile was in complete disarray at close. Pre-acquisition, the profile had 6 reviews averaging roughly 2.3 stars. The negative reviews were not a reflection of the current on-site team, but prior ownership did not prioritize digital presence and did not appear to understand what it costs in a student market. Parents shopping apartments for their kids do it on Google Maps, and a 2.3-star property gets ruled out before anyone calls.

In the first weeks of ownership, focused effort produced 7 new five-star reviews, taking the profile from roughly 2.3 stars to 3.8. We anticipate a continued velocity of about three reviews per week through management. Google permits reviews after any interaction with the business, which includes tours, so student housing turnover works in our favor here. We hope to be at 4.5 stars by the time the CWU school year starts, and the goal is 4.7 by the end of 2027.

You can watch the progress yourself: Campus Village on Google

319-341 G St SE, Quincy, WA (12 units)

On July 31 we closed on a 12-unit building in Quincy, about 30 minutes from Moses Lake in Grant County. This was an off-list raise for a small group of investors. Cody owns a building down the street, so we know this block, this tenant profile, and this submarket firsthand. We are extremely bullish on this one, and it is worth walking through the underwriting in some detail because the deal is a clean illustration of how we think.

The asset. Twelve identical 2-bed/1-bath units of 864 square feet, built in 1978, with washer/dryer hookups in unit. Purchase price was $1.35 million, which is $112,500 per unit and roughly $130 per square foot. Financing is 75 percent loan-to-value at 5.8 percent on a 25-year amortization schedule with a 10-year term, and we capitalized a $5,000 per unit reserve at close for unit renovations.

The setup. In-place rents on the occupied units run $900 to $925 per month. Market rent for these units is comfortably $1,350. That is the whole deal: we bought an asset where every lease is roughly a third below market, in a county where the industrial employment story keeps getting stronger (see Section 3).

The constraint. What we are working against is Washington's new statewide rent cap. House Bill 1217, passed in 2025, limits annual increases on existing tenancies to the lesser of 7 percent plus CPI or 10 percent. The 2026 cap is 9.683 percent, published by the Washington Department of Commerce, and it resets each July. The law also prohibits any increase in the first 12 months of a new tenancy and requires 90 days' written notice. So we cannot mark units to market by notice; we can only walk them up at the capped rate while a tenant stays in place.

Why the deal works anyway. We underwrote the slow path as the base case. Every occupied unit takes the maximum permissible increase each year until it reaches the $1,350 target, then grows at 3 percent. At the 2026 cap, a $900 unit takes about five years to reach $1,350. On that path, with no turnover at all and market rent standing still, the deal produces a levered IRR just under 15 percent and roughly a 2.5x equity multiple over a six-and-a-half-year hold. Year 1 NOI of about $83,000 is a 6.1 percent yield on price; by year 6 the same building produces about $125,000, a 9.2 percent yield on price, and the model exits at a 6.5 percent cap rate, in line with our going-in basis. Debt coverage starts tight in the stub year and builds to about 1.7x by exit.

In other words, the cap slows the repricing, it does not stop it, and the underwriting does not need a single tenant to leave to clear our return threshold.

The upside, three weeks in. Turnover is where the deal accelerates, because the cap applies to existing tenancies, not to a vacant unit re-leased at market. Our crew was on site the day after closing, and both empty units are now fully renovated and on the market at $1,400. We expect them to lease between $1,350 and $1,400, at or above the $1,350 our underwriting assumed. Next week we post the legally permissible 9.683 percent increases to the rest of the building on the required 90-day notice. If that prompts a couple of move-outs, we re-rent those units at market. If every tenant stays, the result is still a meaningful gain: the occupied units average roughly $900 to $925 in place, so the capped increase adds about $87 to $90 per unit per month, roughly $10,500 a year across the ten occupied units. We will also evaluate voluntary lease buyouts where the economics make sense, depending on our LPs' appetite and the math on each unit.

We posted more on this acquisition on LinkedIn: DK Equity on the Quincy closing

Want the model? If the full underwriting is of interest, reply to this email with the word QUINCY and we will send the documentation over.

2. Portfolio Updates

With both closings inside the last month, the portfolio updates are the early operational moves covered above. The scoreboard as of today:

Next month this section gets real: renovation progress, leasing results, and actuals against underwriting.

3. What's Up in Central Washington

The most material development of the month, and arguably of the year for Moses Lake, landed on August 10: Sila Nanotechnologies secured a $1.4 billion loan from the U.S. Department of Defense to expand production of silicon-carbon battery anode material, a supply chain currently dominated by Chinese producers. The Moses Lake plant, which began operating in September 2025 and produces roughly 2 gigawatt-hours of anode material annually, is slated for a fivefold expansion, enough material for more than 100,000 EVs. The loan follows the $300 million private round Sila closed in July. Two things stand out for our underwriting. First, a federally financed expansion converts the Moses Lake site from a promising startup facility into a defense-relevant industrial anchor, with construction employment during the buildout and durable manufacturing payrolls afterward. Second, defense demand diversifies the plant away from EV market cycles, which is the exposure that has hurt the rest of the local battery cluster: Group14 furloughed workers at its roughly 90 percent complete Moses Lake plant in January and has not announced a reopening, and REC Silicon's polysilicon facility remains closed. For apartment owners, a committed, federally backed buildout supports the case for sustained in-migration of wage earners into Grant County.

Two supporting signals arrived the same week. The Port of Moses Lake is issuing bonds to purchase property, per Columbia Basin Herald reporting on August 10. Debt-financed land acquisition by the Port is a forward indicator of industrial recruitment capacity; the Port has been assembling land and rail infrastructure for years, and continued acquisition suggests its tenant pipeline justifies the balance sheet expansion. It follows the Port's selection in July for state technical assistance to plan an Energy Park aimed at clean technology industries. Separately, on August 3 Stoke Space announced an expansion of its rocket test presence at Grant County International Airport, and the Grant County EDC recently told the Moses Lake City Council it has ten active recruitment prospects across manufacturing, aerospace, food processing, data, clean energy, and logistics.

Quincy itself drew national attention this month. An August 13 national opinion column profiled the city as a data center success case: roughly 30 data centers supply about 57 percent of Quincy's property tax revenue, the poverty rate has fallen from 29.4 percent in 2012 to 6.2 percent in 2024, and Grant County electricity rates rose about 3.5 percent year over year against 10.2 percent statewide. The same reporting noted that Quincy home prices have roughly doubled. For our 12 units there, the salient datapoint is the housing shortage the boom keeps producing: doubled home prices push workers toward renting and support the market rents we underwrote. The offsetting risk is power infrastructure cost recovery. Grant County PUD plans roughly $260 million of new transmission lines with most costs recovered through rates, and the utility capped data center load growth in 2025 pending the buildout, so power remains the region's binding constraint.

The macro backdrop is the thing to watch. On August 13 the Washington Employment Security Department published projections showing statewide job growth of just 0.85 percent annually from 2024 to 2029, and statewide unemployment has held at 5.2 percent for three consecutive months through June. The investment case for Grant County rests on project-driven employment, in battery materials, aerospace, data centers, and port tenants, outrunning a slow state economy. That spread is currently intact, and it is what we watch rather than the state average. Items to watch next month: the bond resolution from the Port's August 10 agenda packet, construction timing on Sila's expansion, and the July county employment release.

Thank you for reading edition 001. If you know someone who should be getting this letter, forward it along. Questions, deal flow, or feedback: [email protected].

Camden Kaminsky and Cody Davis

DK Equity

Sources and detail