By Jon Peterson
Los Angeles-based Kennedy Wilson has acquired the 587,000 square foot 90 East office complex in Issaquah for $15 million or around $260 per square foot, according to the company’s statement. Kennedy Wilson invested $76 million of equity, and also secured a 10-year interest-only loan for $77 million at a fixed-rate of 3.85 percent.
Kennedy Wilson did not respond to an email seeking comment for this story.
The sellers of the project was a venture of Talon Private Capital of Seattle and New York City-based Cerberus Capital Management. The sale of this complex was done as an off-market transaction. The sellers had owned the property since January of 2015. The venture had paid $128.25 million or $219 per square foot for the complex at that time.
“We are pleased to expand our presence in Washington by acquiring this high-quality office asset below replacement cost in an excellent submarket,” said Matt Windisch, executive vice president of Kennedy Wilson in a statement. “With two investment grade companies fully occupying the building, 90 East offers a strong initial cash flow yield and the potential to earn attractive long-term risk adjusted returns for the company.”
There is a total of three buildings in the office complex. These assets were developed in phases starting in 1999 and finishing in 2001. Once the sellers had acquired the complex in 2015, they rebranded the property and changed the name from Sammamish Park Place to 90 East.
There are currently no vacancies in the complex. Two of the three buildings in the asset are leased to Microsoft. The third building is leased to Costco. This tenant has its corporate headquarters located about one mile from 90 East. There has been some talk in the marketplace that Costco is planning to expand its footprint at its corporate headquarters location, as stated by sources familiar with the market.
The cap rate on the transaction is somewhere in the 8 percent to 8.25 percent range, according to sources aware of the transaction. This return is based on the current net operating income being produced by the complex.
Kennedy Wilson now has an ownership interest in 1.4 million square feet of office and 10,430 multifamily units in the State of Washington.