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July 25, 2018  

Unico Teams Buying Seattle, Portland Offices

Unico Properties partnerships have struck deals to buy three office properties in the Pacific Northwest for a combined $540 million.

Unico and AEW Capital have agreed to purchase two adjacent downtown Seattle buildings, totaling 713,000 square feet, from an Ivanhoe Cambridge joint venture for roughly $360 million, or $505/sf. Meanwhile, Unico and American Realty are poised to pay UBS Global Asset Management in the vicinity of $180 million, or $450/sf, for the 398,000-sf Moda Tower in downtown Portland, Ore. Eastdil Secured marketed the properties.

The Seattle deal involves the 574,000-sf building at 1111 Third Avenue and the 139,000-sf property at 1100 Second Avenue. The package was 95% leased when it hit the market last year. The buildings fill the block bounded by Second and Third Avenues and Seneca and Spring Streets, just south of Pike Place Market.

The larger of the two is the 33-story tower at 1111 Third Avenue. It was built in 1980 and has undergone $52 million of upgrades since 2013. Community Health Plan has a lease on 102,000 sf until 2026, and law firm Foster Pepper is leasing 97,000 sf until 2027.

The five-story building at 1100 Second Avenue is known as Second & Spring. Developed in 1906, it had major renovations in the 1950s and another $13.2 million of improvements since 2013. Internet marketing firm Moz is leasing 52,000 sf until December 2020. Other tenants include tax consultant Avalara (39,000 sf until 2022) and (39,000 sf until 2023).

Ivanhoe, a real estate unit of Canadian pension-fund advisor Caisse de Depot et Placement du Quebec, and Chicago-based Callahan Capital Properties bought the Seattle buildings in late 2014 for $280 million. The seller was Walton Street Capital of Chicago, which had picked them up via a debt play and conducted extensive renovations.

Seattle-based Unico and Boston-based AEW have teamed up in the Seattle area before. In December 2016, the duo paid Houston-based Hines $193 million, or $625/sf, for Civica Office Commons, a 309,000-sf office property in Bellevue, Wash. Eastdil also brokered that deal.

Moda Tower, the Portland property Unico plans to purchase with Los Angeles-based American Realty, is 90% leased. At the price being discussed, the initial annual yield would be between 5% and 5.5%.

The Class-A property, at 601 Southwest Second Avenue, has a weighted average remaining lease term of seven years, with limited near-term rollover. Insurer Moda Health and law firm Lane Powell have their headquarters in the building, and Nordstrom has a flagship store at the ground level.

The Unico partnership may have the opportunity to boost income by leasing vacant space and raising below-market rents upon rollover. There is also potential to upgrade the lobby and make other improvements.

The 24-story Moda Tower was completed in 1999. Only a handful of Portland office properties are newer, according to marketing materials. It’s within the city’s main shopping district, across the street from Pioneer Place Mall and two blocks from Pioneer Courthouse Square. The property includes a five-level garage with 365 spaces, and there is a MAX light-rail stop at the corner.

The building was originally called ODS Tower, but the name was changed when its namesake tenant rebranded as Moda Health in 2013. UBS acquired the property that year, paying $129 million, or $324/sf. Eastdil advised the seller, a partnership between GE Asset Management and Ashforth Co. of Stamford, Conn.

Unico has previously teamed with American Realty to buy Portland office properties. In January 2017, the duo paid San Francisco-based Shorenstein Properties $85.1 million for the 367,000-sf Congress Center, at 1001 Southwest Fifth Avenue. HFF brokered that sale.