July 31--Schnitzer West, one of the region's biggest developers, sold two of its largest holdings Friday for a total of more than $300 million.
Advanta Office Commons, a three-building, 600,000-square-foot complex in Bellevue's Eastgate area, fetched $240 million, according to county records. Schnitzer got another $65 million for Equinox, a recently completed 204-unit apartment building in Seattle's Eastlake neighborhood.
The sales were the second- and third-largest in King County so far this year, according to county records.
A Schnitzer representative declined comment, saying the company was bound by a confidentiality agreement. The buyers were Delaware entities formed recently by a fund managed by JPMorgan Chase Bank, according to documents filed with Washington's secretary of state.
All the office space at Advanta, completed in 2008, is leased long-term to Microsoft. The software giant also occupies all the office space in downtown Bellevue's 26-story City Center Plaza, which Beacon Capital Partners sold earlier this month for $310 million.
Those long-term leases virtually guarantee a reliable cash flow for the new buyers.
"That's the type of product that is selling in this market," said Steve Schwartz, a principal with brokerage Pacific Real Estate Partners in Bellevue. "There's lots of competition for them."
Kip Spencer, co-founder of commercial real-estate database Officespace.com, agreed. "Investment sales are pretty much down across the board except for Class A properties with marquee tenants," he said.
The eight-story Equinox project began as a condominium, but was converted to apartments last year because of slow sales and an overabundance of new condos in and around downtown Seattle.
Schnitzer West had several new projects in the pipeline when the real-estate market tanked. Like other developers, it has encountered unexpected difficulties.
Its 36-story 1918 Eighth office tower in downtown Seattle remains mostly unleased. Schnitzer cut prices and auctioned some units to spur sales at Gallery and Brix, big new condo projects at Belltown and Capitol Hill, respectively.
And, while Microsoft has leased both office towers at Schnitzer's signature Bravern project in downtown Bellevue, the developer this spring converted one of The Bravern's two condo towers to apartments because of slow sales and a glut of unsold units nearby.
Schnitzer also has been quietly marketing The Bravern office towers for months. But neither Schwartz nor Spencer said they detected signs of distress in the developers' sales of Advanta and Equinox.
Both properties sold for more than their assessed values. The King County assessor values Advanta at about $165 million and Equinox at about $46 million for tax purposes.
Dan Ivanoff, Schnitzer West's managing investment partner, and family-controlled Schnitzer Investment Corp. formed the Schnitzer West partnership in 1997, with Schnitzer providing most of the equity.
The Schnitzer family is among Oregon's wealthiest.
Eric Pryne: 206-464-2231 or epryne@seattletimes.com
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