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CMA
May 03, 2019  

Blackstone Seeks Debt for Seattle Office Deal

Blackstone is shopping for up to $800 million of debt to finance its pending acquisition of two large office properties in downtown Seattle.

The fund shop has agreed to purchase the 985,000-square-foot Wells Fargo Center and the 944,000-sf U.S. Bank Centre from Ivanhoe Cambridge for about $1.3 billion — one of the biggest property trades in Seattle’s history.

Blackstone is requesting quotes on separate floating-rate mortgages at two leverage levels — 60% and 50%. At the higher loan-to-value ratio, Blackstone would borrow about $425 million on U.S. Bank Centre and some $380 million on Wells Fargo Center. The loans would each run five years and wouldn’t be cross-collateralized. Lenders can bid on either or both. Eastdil Secured is advising Blackstone on the financing.

Existing debt on the properties includes a roughly $250 million loan on U.S. Bank Centre that J.P. Morgan led last year. It replaced a 10-year mortgage of some $240 million that New York Life and New York State Teachers had originated in 2008. Wells Fargo Center backed a $212 million floater that Deka Bank and HSBC provided in 2013, which also matured last year. It’s unclear whether that loan was extended or replaced.

Ivanhoe, a real estate unit of Montreal pension-fund advisor Caisse de Depot et Placement du Quebec, acquired Wells Fargo Center in 2013, paying Beacon Capital of Boston $390 million, or $396/sf. Ivanhoe acted in partnership with Chicago-based Callahan Partners. Last year, Ivanhoe acquired Callahan.

Ivanhoe and Callahan also were partners in U.S. Bank Centre, along with Abu Dhabi Investment Authority. Ivanhoe was negotiating last year to acquire ADIA’s stake, and it’s unclear whether that buyout was completed or would happen in conjunction with Blackstone’s purchase of the 100% interest.

Wells Fargo Center, at 999 Third Avenue, was completed in 1983 and renovated in 2015. The 47-story building has underground parking for 666 vehicles. The 44-story U.S. Bank Centre, seven blocks away at 1420 Fifth Avenue, was developed in 1989 and renovated in 1994. It has retail space on its lower three floors and 1,000 parking spaces.