Unico Properties Recapitalizing US Bancorp Tower

PORTLAND-Unico Properties is recapitalizing the partnership that owns US Bancorp Tower, the 1.1-million-sf signature office building here that it acquired in 2000 for about $165 million. Sources familiar with the transaction tell GlobeSt.com the Seattle-based real estate company is bringing in Menlo Park, CA-based Broadreach Capital Partners to take out its 50-50 partner in the asset, JP Morgan, which is liquidating the fund that holds its interest in Oregon’s largest office building. Broadreach is the real estate private equity firm formed in early 2002 by Ned Spieker, John Foster, Eli Khouri and Craig Vought, four former top executives of Spieker Properties, which merged with Equity office Properties in a 2001 transaction that valued Spieker at more than $7 billion. The Broadreach team also includes director Trevor Wilson, who previously handled JP Morgan’s acquisition and asset management activities in the Western US and was intimately involved in JP Morgan’s acquisition of US Bancorp Tower. A Broadreach executive could not be reached for comment Friday afternoon.Unico executive vice president John Lamb declined to confirm that Broadreach will be its new partner or how much would be paid for JP Morgan’s interest, but did tell GlobeSt.com that the recapitalization would be completed by the end of the month and that the value of the building has risen over the past four years. “The market’s gotten higher,” he says. “People look back at 2000-2001 as the high point, but when the general stock market started to fall and institutions began looking at different ways to invest their real estate-earmarked funds, there became a lot of competition for trophy assets, such that you can now attract buyers that drive down cap rates lower than 2000-2001.”In addition to taking out JP Morgan, Lamb says Unico and its new partner will put in additional cash in order to take out one of the lenders on the asset, Wafra Investment Advisory Group, Inc., a US-registered investment adviser that is beneficially owned by The Public Institution for Social Security of Kuwait. The Public Institution for Social Security is an autonomous agency controlled by the State of Kuwait. Lamb declined to say how much debt US Bancorp has on the building or how much of it Wafra holds.US Bancorp Tower is believed to be just one of several assets that Unico is recapitalizing. “We expect to have a lot of information to tell people at the end of the month,” says Lamb. Unico’s core business is its partnership with the University of Washington, wherein it has operated and managed for 53 years the university’s Metropolitan Tract, a 10-acre chunk of prime real estate in Downtown Seattle that includes Rainier Tower, Puget Sound Plaza, Financial Center, IBM Building, the Skinner Building, and the Cobb Building, which is now being converted from office to residential. With its partnership set to expire in 2014, Unico has been making its own investments to ensure itself a future if it does not retain the contract. US Bancorp Tower was one of the first purchases in Unico’s diversification effort. Other owned properties include five assets in Bellevue, WA, including the 408,000-sf Skyline Tower; five assets in Renton, WA, including 400,000-sf One, Two and Three Renton Place office complex; the 300,000-sf Wells Fargo Plaza in Tacoma, WA; the 256,000-sf US Bank Plaza in Boise, ID; and the 400,000-sf 100 Pine Street building in San Francisco. It owns no properties in Seattle due to its non-compete clause with the University of Washington.According to its Web site, Broadreach Capital Partners invests in a variety of western United States real estate assets, focusing on opportunities “that contain value-creation components such as entitlements, development, leasing, asset repositioning and use changes. Through its discretionary real estate fund, BRCP Realty LP I, the company has raised $314 million of equity for investment activity and serves as the general partner to a broad, well-capitalized group of institutional investors.