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CMA
March 15, 2019  

Floaters Sought on New Complex Near Seattle

A developer is looking to line up $550 million of debt on the office and hotel portions of a mixed-use development in suburban Seattle.

SECO Development wants a $400 million mortgage on a 717,000-square-foot office complex that’s slated for completion late this year in Renton, Wash. The local firm is also seeking $150 million of debt on the adjacent 347-room Hyatt Regency Lake Washington, which opened in mid-2017. The preference is for floating-rate loans, each with a total term of five years. Newmark is advising SECO on the financing.

The two properties and a 383-unit luxury apartment complex make up Southport on Lake Washington, on the waterfront at the south end of the lake, 15 miles from downtown Seattle. SECO bought the land some two decades ago and has been building the master-planned development in stages. The multi-family buildings, known as The Bristol, were completed in 2002 and 2008.

The office component contains three nine-story buildings that will include street-level retail space. The proposed loan on that portion would include an $88 million future-funding piece reserved for leasing costs and tenant improvements.

Some tenants have been lined up, but how much space has been spoken for and whether signed leases are in place couldn’t be learned. The project is aimed at capitalizing on tightness in office occupancy across the Seattle-Bellevue region, home to large employers such as Amazon, Kaiser Permanente, Microsoft and Starbucks. Boeing’s Renton aircraft factory is adjacent to the Southport development.

The loan on the office buildings would replace $265 million of construction debt provided a year ago by Apollo Commercial Real Estate. The floating-rate debt has a three-year initial term.

Also last year, SECO refinanced the Hyatt Regency with a $105 million loan from Starwood Property and Argentic. A portion of the new hotel loan would retire that mortgage. The hotel is valued in the vicinity of $250 million.

The Hyatt Regency, at 1053 Lake Washington Boulevard North, has a range of amenities including multiple restaurants, more than 60,000 sf of meeting and event space, an indoor saltwater pool, a spa, and business and fitness centers. Many of the guest rooms and event spaces have expansive views of the lake. SECO expects that when the office component is completed, it will drive more business to the hotel.

The complex is just off Interstate 405, 10 miles northeast of Seattle-Tacoma International Airport.