Martin Selig risks default on $239M in loans tied to Seattle offices

Mortgages for seven buildings with overall occupancy of 69% go to special servicing

Martin Selig Risks Default on $239M in Seattle Office Loans

A photo illustration of Martin Selig Real Estate EVP Jordan Selig along with 645 Elliott Avenue West (front) and 100 West Harrison Street (back) in Seattle (Getty, Martin Selig Real Estate)

Martin Selig Real Estate risks imminent default on $239 million in loans tied to seven buildings with 1.1 million square feet of offices in Seattle, each sent to special servicing.

The locally based investor faces “imminent monetary default” on the mortgages that matured early this month for the seven buildings in Elliott Park, Lower Queen Anne, Denny Triangle and the Chinatown-International District, the Puget Sound Business Journal reported, citing the special servicer.

Each was transferred to CWCapital, a special servicer based in Washington, D.C.

The offices include a 187,600-square-foot building at 635 Elliott Avenue West where Amazon.com leases space, and a 149,700-square-foot building at 645 Elliott Avenue West in Elliott Park, along the waterfront.

They include a 63,900-square-foot building at 200 West Thomas Street and a 67,100-square-foot tower and a 66,800-square-foot tower at 100 West Harrison Street, in Lower Queen Anne.

And they include a 408,200-square-foot building at 2101 4th Avenue in the Denny Triangle and a 144,700-square-foot building at 315 5th Avenue South in the Chinatown-International District.

Three tranches of interest-only commercial mortgage-backed securities loans come to $238.9 million and are secured by the Class A and B buildings between 15 and 54 years old. Two tranches with a combined balance of $142 million matured May 1. A third tranche with a $97 million balance matured May 6. 

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“We requested for the loans to be transferred to a special servicer so that we could modify and extend the loans. All modifications to an existing CMBS loan need to be made through a special servicer,” Jordan Selig, executive vice president of Martin Selig, told the Business Journal in an email.

She said the firm is in talks with CWCapital about modifying the loans. She expects to close within 60 days.

Modification isn’t a given in this challenging market of high interest rates, falling values and heightened scrutiny by lenders, with many of them avoiding the market entirely, according to the Business Journal.

The combined occupancy of the seven buildings was 92 percent in 2017, but fell to 69 percent last year, according to special servicer reports.

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The seven properties at risk of default total almost 1.1 million square feet. Martin Selig Real Estate, founded in 1958, is the Seattle region’s 11th-largest commercial property manager, with more than 4 million square feet of offices, according to Business Journal research.

Overall vacancy in the Seattle Central Business District office market was 28.7 percent in the first quarter, up 8.5 percent from the 20.2 percent vacancy a year ago, according to Cushman & Wakefield.

— Dana Bartholomew