Smith Tower gets new owners
Affiliates of mortgage holder CBRE Capital Markets of New York took ownership of Seattle's landmark Smith Tower in a foreclosure auction on the steps of the King County Administration Building Friday.
Seattle Times business reporter;
Poll: Smith Tower's future
Seattle's landmark Smith Tower changed hands Friday at a foreclosure auction that had all the drama of an afternoon nap.
The new owners are affiliates of CBRE Capital Markets, of New York, which acquired the delinquent mortgage on Seattle's first skyscraper last fall.
No one else bid on the much loved but mostly empty office tower.
Representatives of CBRE — the 21st owner in the building's 98-year history — did not attend the auction outside the King County Administration Building, and were not available to discuss plans for the 42-story tower.
But Seth Howard, owner of the Collins Pub — a few doors down from the Smith Tower's entrance — applauded the ownership change.
"I like CBRE," he said. "I want somebody that's going to come in and put that building in shape."
CBRE bid $36.795 million for the Smith Tower and neighboring Florence Building.
Since that is less than the face value of the $44 million CBRE is owed, no cash will change hands.
The morning auction took all of eight minutes. T.J. Parkes, of Puget Sound Trustee Services, surrounded by a sea of cameras, microphones and notebooks, read from a prepared script and asked several times whether anyone had come to bid.
He got no response.
The buildings' previous owner, Walton Street Capital, of Chicago, bought them in 2006 for $44 million, and at first pursued a plan to convert Smith Tower to condos.
The housing crisis killed that proposal; meanwhile, office tenants fled the historic tower, which opened in 1914.
It's now more than 80 percent vacant, according to court records, and monthly rents don't cover the building's operating expenses.
Walton Street defaulted on the mortgage last year, and CBRE began pursuing foreclosure shortly after it acquired the debt in September.
At CBRE's request, a King County superior-court judge in December appointed a receiver, Goodman Real Estate, of Seattle, to take over management of the tower.
With a new owner, the receivership will be terminated over the next few weeks, although Goodman could remain involved. A principal with the firm did not return a call.
According to Goodman's latest report to the court, another CBRE affiliate has begun marketing the building to prospective tenants. There's interest in two complete lower floors and suites on three other floors, the report says.
Goodman also has indicated the building, at Second Avenue and Yesler Way, suffers from significant deferred maintenance.
Howard, the pub owner, said the tower was mostly leased when he opened his restaurant in 2003, and serving workers from the landmark was at the core of his business plan.
"During the heyday, when there were companies like Disney and ESPN and Providence [Health & Services] in there, I could go through my restaurant at 12:15 and every other person was from the Smith Tower," he said.
Goodman representatives have told him they expect to have the tower at least 50 percent occupied by the end of the year, Howard said: "The market's in a lot better shape than it was."
William Justen, who ran the real-estate arm of Seattle's Samis Foundation when it sold the Smith Tower to Walton Street six years ago, said he was relieved by the ownership change: "I was just hoping Walton Street wouldn't step in at the last minute."
The tower is a one-of-a-kind property that needs to be re-branded, Justen said: "Hopefully they [CBRE] will jump-start it with a whole new approach."
Eric Pryne: firstname.lastname@example.org or 206-464-2231