The Southport complex on Lake Washington in Renton, specifically its office portion, will not be auctioned off as previously expected. Starwood Capital Group, the project lender, has taken over the three office towers and has fulfilled all financial obligations of the previous owner, Seco Development, according to a report from the Puget Sound Business Journal. The operations at Southport have now been stabilized, and Starwood has appointed CBRE as the property manager and leasing team.
Andrea Pierce, a managing director at Starwood, said in the report that the company believes that the office campus is well-suited for the post-Covid workplace and will help tenants attract and retain talent. The financial details of the acquisition were not disclosed.
Earlier this year, commercial real estate services company Newmark had announced that it was offering investors the opportunity to acquire a non-performing loan of $293 million secured by the approximately 720,000 square foot office complex.
Located at 1133 Lake Washington Blvd., the full Southport campus comprises 17 acres of waterfront property that along with the three nine-story office buildings at the center of the current market listing also includes the 347-room Hyatt Regency Lake Washington and the 383-unit Bristol Residences.
In 2017, SECO Development arranged $265 million in construction financing through Cushman & Wakefield for the office complex, which broke ground in 2016, according to The Registry’s earlier reporting. In January of 2021, the construction loan was converted to permanent financing totaling roughly $328 million, which was provided by Starwood Capital Group.
According to information from Newmark, the fixed-rate loan on the office complex had an initial 12-month term and featured two six-month extension options. The loan was extended in March 2022 and September 2022 via those contractual options, which gave the loan its final maturity date of March 2023. In April, after the loan fell into default, it was seized by the lender.
Currently, around 175,000 square feet of office space has been leased, with tenants including Regence BlueShield, Wizards of the Coast and The Partners Group, according to the Business Journal report.
Starwood Capital Group is primarily focused on real estate ownership and has extensive experience in owning and operating office properties. The company has deployed its asset management team to ensure a smooth transition. Despite the option to sell the asset, Starwood has chosen to invest further in stabilizing the property and completing the business plan. While no specific information was provided on rental rates, Pierce stated in the report that the firm has the flexibility, resources, and commitment to meet the custom space needs of tenants and provide a high-quality experience at Southport.
Starwood plans to enhance the Southport complex by adding common-area amenities such as conference/meeting facilities and roof decks to each building. The company is also looking forward to the completion of the Park Avenue extension later this year, which will improve access from the Landing shopping center.
CBRE’s leasing team, led by Tim Owens, Scotta Ashcraft and Lennon Atteberry, will handle the leasing activities at Southport.
