Boston group to acquire Union Bank of California center
Beacon Capital Partners said it will buy the tower from Chicago's Walton Street Capital and expects the sale to be final by the middle of next month.
While Beacon would not disclose the price, sources familiar with the sale said it would top $100 million. That's a bargain compared to the near record-setting prices nabbed recently by other office developments in downtown Seattle and Bellevue.
But the company plans to spend a significant amount renovating the 31-year-old tower. "A lot of people said they really do like the building," said Jeremy Fletcher, Beacon's senior vice president for the western region. "But it is tired and requires capital — and lot of it — and we are prepared to do that."
Beacon is a private company that specializes in renovating older office buildings then selling them for a profit. The company owns properties in Boston, Denver, Washington, D.C., and Los Angeles.
"That is typical for them, they get in and get out," said Rob Hollister, an executive with Hines who developed the nearby IDX Tower. "They try to hold things for three to five years max."
With the Union Bank of California Center, the company will have a project on its hands.
When it opened in 1973, the building helped to establish the area around Fourth Avenue and Madison Street as the heart of downtown's financial center. But in the decades since, the tower has lost its status as one of the city's premier addresses.
Among the building's drawbacks are its small and unimpressive lobbies and rows of exterior columns that limit the size of windows and interrupt views. Worse yet, about a quarter of the building is vacant — a rate that is significantly higher than downtown as a whole.
Still, Beacon sees a lot of potential in the building and the area that surrounds it.
The intersection at Fourth and Madison has boomed with the recent construction of IDX Tower and Seattle's Central Library. Beacon is also buying a piece of downtown real estate where it could develop up to 300,000 square feet.
Walton Street quietly put the Union Bank Center up for sale earlier this year. The company bought the building in 1998, marking the end of one of Seattle's bitterest real estate battles.
In the 1980s, the Bank of Tokyo loaned $48 million to a partnership led by Florida developer Emanuel Organek to buy the building, part of a wave of Asian investment in U.S. real estate. The bank then spent much of the 1990s in court trying to get its money back after Organek's partnership filed for bankruptcy. Walton Street bought the building in a court-ordered auction.
This is not Beacon's first Seattle investment. Beacon and local developer Greg Smith built the Millennium Tower at Second Avenue and Columbia Street. The partnership sold the office portion of the building in 2003 for nearly $64.8 million.
Fletcher would not say if Beacon planned to work with Smith and his company, Gregory Broderick Smith Real Estate, on redeveloping and leasing the Union Bank tower, but sources say the two are likely to join forces again.
For his part, Smith said he is just happy to see Beacon return to Seattle.
"It is a vote of confidence in the city," Smith said. "They have great plans for the building."
J. Martin McOmber: 206-464-2022 or mmcomber@seattletimes.com
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