By Jon Peterson
GLL Real Estate Partners is the buyer of the 754,000 square foot Safeco Plaza at $387 million, according to sources that are aware of the transaction. The property is located at 1001-1025 Fourth Avenue. The deal is expected to close next week.
A company representative of GLL did not respond to emails seeking comment for the story. The seller is a joint venture between Los Angeles-based CommonWealth Partners and the California Public Employees Retirement System. The real estate manager on the partnership did not respond to several phone calls seeking comment for this story.
GLL has its home office in Munich, Germany. It’s West Coast regional office is based in San Francisco. GLL is planning on buying the property for a Korean capital source, according to sources. There were several interested capital sources attempting to buy the property. This includes a pension fund based in the United States and a core open-ended commingled fund.
The price per square foot comes in at around $488 per square foot. This falls short of the mid $700 per square foot that brand new fully-leased properties are attracting. One of the reasons for this is that Safeco Plaza was built in 1969 and had been renovated in in 2014 and 2015.
The stabilized cap rate on this transaction with Safeco Plaza is five percent. This return is based on the property’s current net operating income. The property is now 98 percent occupied. Safeco takes up 2/3 of the building, and it’s lease in the property runs for another 10 years.
The CommonWealth Partners/CalPERS partnership owns two other assets in Seattle, according to the CommonWealth Partners Web site. One is the Russell Investments Center in Seattle. This is a 42-story 886,000 square foot office building located at 1301 2nd Avenue. The other property is the 583,179 square foot City Center Plaza in Bellevue. Its address is 555 110th Avenue Northeast.
The transaction on Safeco Plaza will be part of a potential of $5 billion worth of office sales transactions that could be happening in the greater Seattle market in 2016, which would be an all-time record, according to sources that track the sales of office buildings in the greater Seattle market. All this activity would include the sale of assets in downtown and in the suburbs.