By Jon Peterson
San Francisco-based Swift Real Estate Partners is schedule to close the purchase of the Delphi Building in Bellevue later this month. The firm is paying just under $250 per square foot or $17.4 million for the 70,000 square foot office building located at 3633 136th Place SE.
The real estate investor believes that the property offers a good risk adjusted return for its partners, with upside through repositioning and re-leasing the asset. “The majority of the leases at the property will come up for renewal over the next four years, and we think there is an opportunity to create an environment that will support the existing tenants desire to renew their leases,” says Kelsey Schultes, a senior associate with Swift. She is working on the transaction which is set for a July 8th close.
Swift believes the property will offer tenants a low cost alternative to downtown Bellevue office properties, including the three new developments completed in 2015 and 2016. “The Delphi Building offers a 30 percent discount to projects in Downtown Bellevue. Another benefit is that it offers free surface parking, while costs to park in downtown Bellevue are continuing to rise. The Delphi Building offers great freeway access and proximity to amenities, with freeway signage opportunities that tenants value,” said Schultes.
Swift is planning to make improvements to the Delphi Building. This includes updating the exterior building coloring, adding a large outdoor patio and upgrading the lobby. The asset is now 92 percent occupied and is located in the Eastside’s I-90 sub-market where the overall occupancy is 94 percent.
The Delphi Building was developed in 1983. The property was acquired with a mixture of debt and equity. The cap rate on this transaction was 6.9 percent. Sun Life is the seller of the property with Ann Chamberlin, a managing director at JLL, representing them in the sale.
Swift will be acquiring the property for its fund, Swift Real Estate Partners Fund II. The Delphi Building would be Swift’s fourth office asset in Bellevue. Swift recently completed its capital raise on Fund II at $410 million.