Martin Selig Lays off 86 as 7 Buildings Go Into Receivership

Martin Selig Real Estate has had seven older office properties shunted into receivership as it bleeds workers while struggling to pay off hundreds of millions in debt.

The locally based investor laid off 86 workers and its special servicer, CW Capital, appointed the receiver for the buildings backed by $239 million in commercial mortgage-backed securities, the Puget Sound Business Journal reported.

The unidentified receiver then chose Kidder Mathews to manage the affected buildings, which include 635 Elliott Avenue West, where Amazon.com leases offices.

Martin Selig Real Estate, the 67-year-old commercial development firm led by Martin Selig, is on the ropes. The largest independent developer in the Pacific Northwest owns 31 office buildings, containing 4.9 million square feet.

Last spring, the firm defaulted on the $239 million in CMBS loans tied to the seven buildings with 1.1 million square feet of offices. The landlord has been working with CW Capital, the special servicer, to modify and extend the loan.

The affected properties are Class A and B buildings between 16 and 55 years old and spread across downtown. Last spring, the seven buildings were 69 percent occupied, down from 92 percent in 2017, according to a special servicer’s report.

The properties include 635 Elliott and 645 Elliott, both on the waterfront, in Elliott Park.

They also include Fifth & Jackson, across the street from King Street Station; Fourth & Blanchard in the Denny Regrade; and three in Lower Queen Anne, including 200 West Thomas and both towers of the West Harrison campus, according to the Business Journal.

Selig needs a capital injection to fund leasing commissions and tenant improvements. But to attract that money, CW Capital would have to write off some of the debt — no easy task with higher interest rates and declining property values, according to the Business Journal.

Another $379 million in securities backed by nine older Seattle office buildings comes due this month.

In December, Martin Selig defaulted on a $240 million loan on two newer office buildings, with the firm indicating it may hand the keys to its lender, Acore Capital.

The combined debt adds up to $858 million, secured by office properties hammered by a pandemic shift to remote work, suppressing demand and driving values to historic lows.

To raise cash, Martin Selig listed two development sites for an undisclosed price at 400 Fourth Avenue W and 401-419 Queen Anne Avenue N, in Lower Queen Anne.

More recently, the company agreed to turn over to a receiver seven Seattle parking lots, which it borrowed $50 million against from Goldman Sachs Bank, according to the Business Journal.

— Dana Bartholomew