By Jon Peterson
New York City-based Blackstone Real Estate Partners will be the future owner of the 934,000 square foot 800 Fifth Avenue office building in Seattle. The planned purchase price is $540 million, or roughly $578 per square foot, as stated by sources that are aware of the deal.
Blackstone declined to comment when contacted for this story, and its acquisition of the property has not closed yet. The projection for the close is that this will happen either prior to the end of this year or sometime early in 2019.
The seller of the property is a venture led by New York City-based J.P. Morgan Asset Management and Houston-based Hines as the operating partner. J.P. Morgan declined to comment for this story, and Hines did not respond to a phone call seeking comment.
Blackstone, once the acquisition closes, will be placing the property into its core plus open-ended commingled fund that goes by the name of Blackstone Property Partners.
There are a couple of factors that place the property in a core-plus asset category. One is that the office building has some vacancy that Blackstone would be leasing up. The other situation is some of the rents in the property are below market rates, which would allow the new owner to create some additional value by bringing rents up to market levels.
Most of the square footage in 800 Fifth Avenue is office space. The major tenants in the property include Bank of America, Princess Tours, Providence and Regus, as stated on the office building’s website. The two other parts of the property are 17,000 square feet of retail and a 612-space below grade parking operation.
The sellers of 800 Fifth Avenue had gone through a $46 million renovation of the asset in 2017, according to published reports. The work on the property included fixing up some of the interior space and improvements to the bathrooms and elevators.
Blackstone looks to invest in real estate on a national scale for Blackstone Property Partners. This commingled fund has a total investment value of $29.8 billion, as stated by the real estate manager in its 2018 third-quarter supplemental report. This portfolio has produced an 11 percent net IRR.