By Jon Peterson
Los Angeles-based Kennedy Wilson is in the process of marketing two properties it owns in Bellevue, and the combined pricing could reach around $185 million, according to sources aware of the sale of the properties. The first property is the 279,896 square foot office asset in Bellevue known as the Eastgate Office Park. The pricing guidance on this sale is $125 million. At this pricing, the asset will have been traded at approximately $446 per square foot. The company is also marketing for sale the 137,000 square foot Corporate Campus East office property in Bellevue. The potential price on this property could hit $60 million, or just under $438 per square foot.
Kennedy Wilson did not respond to an email for this story. The listing agent on the sale of the Eastgate Office Park is the CBRE Capital Markets Team in the Seattle office, while Newmark is representing the company on the Corporate Campus East sale.
The brokerage firms declined to comment when contacted for this story.
Kennedy Wilson had acquired the Eastgate Office Park property for its commingled fund Kennedy Wilson Real Estate Fund V. However, the fund manager now is in a position where it has to dispose of this property, since the the fund is approaching its closure. Kennedy Wilson had acquired the property for $74.8 million, or just over $267 per square foot, in April of 2016, according to public records.
The address of this property is 15325, 15355, 15375 and 15395 SE 30th Place. It was first developed in 1984 and 1985, and the four-building complex covers 14 acres of land.
The sale of the asset will offer the new owner both a mark-to-market leasing opportunity and a long-term expansion option through a redevelopment. The current leases in the asset are 15 percent below market, according to some estimates, and over 75 percent of the rent is expected to roll over the next five years.
The property is located in an area of significant future activity in the city. The Bellevue City Council is now considering a rezoning approval for the second quarter of this year that may bring significant development this part of the city. This rezone would allow up to 611,267 square feet of development, possibly expanding the marketability of this location.
Eastgate Office Park is now 99 percent leased, and there are four major tenants in the property. These are Hasbro, which occupies a 32,344 square foot lease, Seagull Scientific, which takes up 27,825 square feet, ValueOptions, which is in for 18,332 square feet, and Capital Benefit Services for 16,059 square feet. The average remaining lease term for all of the tenants in the property is 2.9 years.
The office asset is projected to attract major institutional investors due to the potential size of the transaction. The possible capital sources that will be considering the asset for purchase will likely slot the property into a core plus investment category.
The Corporate Campus East office property in Bellevue is a three-building office complex located at 3025-3075 112th Avenue NE. It is now 93 percent leased with nearly a third of the property leased out to Microsoft. The current rents are roughly 25 percent below market, which would allow the new ownership a mark-to-market opportunity. In addition, there is a chance to add 50,000 square feet to the property in the future, which would provide the buyer a way to increase the size of the property by nearly a third.