Westlake Center, Amazon.com Tower among other troubled properties
Several other prominent Seattle office towers also have big loans coming due that are at risk of default, according to analysts.
Seattle Times business reporter
In addition to Goldman Sachs, the owners of several other prominent Seattle office towers have big loans coming due that are causing them trouble in this time of declining commercial real-estate values and tighter credit.
The properties include 25-story Westlake Center in downtown Seattle; the landmark 16-story Amazon.com Tower on Beacon Hill; and the Metropolitan Park East and Metropolitan Park West buildings near Interstate 5 in the Denny Triangle, nicknamed the "Twin Toasters."
The Met Park East building faces the possibility of "imminent monetary default" two weeks from now, a report says.
The loans associated with all four buildings have been transferred to "special servicers" that handle debt that has defaulted or is in danger of defaulting, according to reports filed by managers of the commercial mortgage-backed securities into which the loans have been packaged.
In all cases the borrowers continue to make their monthly payments, the reports indicate.
Westlake Center, across Pine Street from Westlake Park, includes a four-story retail mall. Its majority owner, General Growth Properties of Chicago (GGP), is the nation's second-largest shopping-mall operator.
GGP borrowed $71 million from now-departed investment bank Lehman Brothers in 2001, putting Westlake Center up as collateral. It still owes lenders $63 million; if that balance isn't paid in full by February, lenders could jack up the interest rate and commandeer any excess cash flow.
General Growth has asked for an extension, according to special servicer LNR Partners. The mall operator put Westlake Center up for sale two years ago but could find no takers willing to pay its price.
GGP did not respond to a request for comment.
The highly visible Amazon.com Tower, on the north end of Beacon Hill above Interstate 90, was built in 1933 as a U.S. Public Health Service hospital. A decade ago Seattle developer Wright Runstad leased the building for 99 years, renovated it and subleased it to Amazon for its headquarters.
For financing, Wright Runstad borrowed $23 million in 2000 from investment bank Credit Suisse.
Earlier this year it was on the brink of defaulting, according to a report last spring by the loan servicer. Amazon's lease was scheduled to expire in May — the online retailer is moving to a new headquarters complex in South Lake Union — and Wright Runstad had no successor lined up.
The company pushed to get the loan transferred to special servicing to help find a solution, said President Greg Johnson. It got a one-year reprieve when Amazon agreed to extend its lease until next May.
"Is that going to happen again [next May]? Who knows," Johnson said.
Meanwhile, Wright Runstad missed a June deadline to refinance. As a result, it's paying its lenders higher interest while the parties discuss a loan modification and Wright Runstad continues its search for a replacement for Amazon.
The space has been on the market for nearly three years, ever since the fast-growing online retailer announced its move to South Lake Union.
Up in the Denny Triangle, Walton Street Capital, a Chicago private-equity investment firm, bought 20-story Metropolitan Park East and 18-story Metropolitan Park West in 2005. To finance the acquisitions it borrowed more than $150 million from Connecticut-based Greenwich Capital.
Those loans were for five years, interest only. All the principal is due Nov. 6.
The Metropolitan Park East loan is threatened with "imminent monetary default due to the upcoming maturity," special servicer ING Clarion said in a note this month.
"Borrower has expressed that the loan may not be refinanceable given the current capital markets," it added.
Walton Street is reviewing a loan-modification proposal for Metropolitan Park West, according to servicer reports. The firm did not return a call seeking comment.
Eric Pryne: 206-464-2231 or firstname.lastname@example.org
This story was originally published Oct. 23, 2010, and corrected Oct. 25, 2010. The original story didn't provide attribution for the statement that Wright Runstad's loan on the Amazon.com Tower on Beacon Hill was on the brink of default earlier this year. The statement should have been attributed to the servicer, which reported last spring that the loan faced "imminent default." Wright Runstad President Greg Johnson says his firm never was in danger of defaulting on its loan.