Seattle, Wash., (January 13, 2017) – Leading investment banking firm George Smith Partners has secured a $73 million non-recourse bridge loan for the conversion, renovation and stabilization of the Seattle Design Center on behalf of Greenbridge Investment Partners, a full-service commercial real estate firm. The financing was arranged by George Smith Partners Principal Steve Bram.
“Seattle’s creative office market is flourishing, and shows no signs of slowing in the near future,” says Bram. “Vacancy rates have reached pre-recession lows, and tech giants such as Amazon and Facebook are expanding in the market. This activity fuels a deeper demand for creative office, and presents an opportunity for owners who are in a position to deliver creative space to the market.”
The design center, comprised of two buildings situated in the Georgetown submarket of Seattle, historically served as a well-known destination for high-end home furnishings and design services. Since acquiring the property in 2014, Greenbridge Investment Partners rebranded the buildings into:
- Building 1: a 157,000 square-foot asset now called Seattle Design Center
- Building 2: a 280,000 square-foot asset now called Georgetown Squared (G2)
“While our client had purchased the two adjacent design center buildings for $24.9 million at 43-percent overall occupancy, over the last two years, Greenbridge renovated the Seattle Design Center building and consolidated the showroom/design tenants into that facility,” explains Bram. “Now, Greenbridge is ready to begin a major repositioning of the G2 building from showroom space into creative office.”
Bram notes that the challenge in this transaction was identifying a lender that could refinance the existing loan to support this major conversion.
“There were two key obstacles to overcome,” he says. “First, the existing lender was unable to increase the size of the lending facility. Second, the sponsor had greatly increased the scope of the renovation plan in order to meet the need for high-end creative office. By demonstrating the shortage of creative office product in the market, as well as the strong demand for this product type, the George Smith Partners team identified a lender who recognized the value in the project and funded the loan.”
The $73 million non-recourse bridge loan closed at 59.7-percent loan-to-stabilized value at a competitive LIBOR spread for a 24-month term with one 12-month option. $49 million was funded at closing, and an additional $24 million will pay for renovation, construction, tenant improvements and leasing commissions at the G2 building.
Sean Hashem, Principal of Greenbridge Investment Partners explains, “This is a major success story for our firm. We recognized that demand was not sufficient to operate both buildings as a home furnishing and design center, and we understood the need for creative office space in the marketplace. By implementing our re-tenanting and repositioning strategy, we have brought the Seattle Design Center building to 86-percent occupancy, and our G2 building is already 45-percent pre-leased to strong tenants.”
Greenbridge’s G2 office building will offer a full creative environment with expansive 60,000 square-foot floorplates, exposed ceilings and concrete floors, glass walls for natural light, unobstructed views of downtown Seattle and Mt. Rainier, and full-service amenities, including an upscale fitness center and conference center.
The property is located at 5601 & 5701 Sixth Avenue in Seattle, Washington, in close proximity to major traffic routes. More information on G2 is available at www.georgetownsquared.com.
About George Smith Partners
Founded in 1992, George Smith Partners is a leading national real estate investment banking firm that specializes in arranging financing for commercial and multifamily properties, including acquisition, construction, bridge and permanent loans, as well as mezzanine loans, highly leveraged participating loans and joint venture equity. The company has arranged more than $35 billion in financing since its inception. Additional information about George Smith Partners is available at www.GSPartners.com.
Greenbridge is a full-service commercial real estate firm that specializes in ownership, property management, leasing, construction and turnaround of value-add and core plus properties. Partners Sean Hashem and Fareed Kanani established the firm in 2012 with a focus on purchasing underachieving projects with the highest potential of becoming “best in class” properties. For over 28 years, the expert team has worked together to apply its resources to the success and optimal repositioning of each asset purchased and has been dedicated to maintaining that standard of excellence. More information is available at greenbridgemgmt.com.