January 13, 2017

BioMed Realty pays $16M for SLU site

King County records show the former American Linen Supply block, at 700 Dexter Ave. N., has sold for $16.2 million.

The seller was 700 Dexter LLC, which is associated with Denver-based Frontier Renewal and unnamed partners. Frontier says on its website that it acquired control of the property in 2010, but the last recorded sale was in 2015, from American Linen Supply Co. to 700 Dexter LLC, for almost $3.4 million.

The buyer was BMR-Dexter LLC, whose governors include several executives at BioMed Realty, which is based in Cambridge, Massachusetts and also has a Seattle office.

BioMed declined to comment on the sale. It already owns six properties in Seattle, including Vue Research Center, Omeros Building and 307 Westlake.

No current building plans are on file for the property.

The once-contaminated site is bounded by Dexter, Roy, Valley and Eighth Avenue North. The Juxt apartments are just north of the site, and a two-block parcel on Mercer that the city plans to sell is on the south.

Current zoning allows office towers to 160 feet on the block, which measures 61,440 square feet. A car repair shop and an industrial dry cleaning operation called American Linen Supply once operated there.

In 2013, Frontier began a $15 million environmental cleanup on the site, with SoundEarth as its contractor. At the time, Frontier told the DJC that the site had significant soil and groundwater contamination, including tetrachloroethene, or PCE. SoundEarth has used an electrical resistance heat treatment for the cleanup.

Puget Sound Business Journal reported in 2014 that the Frontier LLC and BioMed had a purchase and sale agreement for the site. Court records show the $18 million agreement was signed in 2011, with $1.44 million paid in earnest money.

In 2015, those two parties went to U.S. District Court for a bench trial over the agreement. A Vulcan Real Estate LLC claimed that an underground toxic plume had reached the site of its Allen Institute for Brain Science, which was then under construction. Vulcan's threat of legal action complicated and delayed the sale, which also required sign-off from the state Department of Ecology.

Court records say that the Frontier LLC tried to terminate the agreement with BioMed. The Frontier LLC then agreed to sell the property in 2015 for $28.5 million to Capstone Partners. BioMed filed for breach of contract.

Frontier's request for summary judgment was denied last March. In November, Judge John C. Coughenour ordered the Frontier LLC to sell the property to BioMed. Because BioMed had waived the condition of a no-further-action letter from the Department of Ecology, an escrow amount of $1.8 million was deducted — hence the purchase price of $16.2 million instead of $18 million.

The Frontier LLC stated in court records that the cleanup would take five to seven years. City records for the site include a Jan. 7 report from Otto Rosenau & Associates, a geotechnical engineering firm, stating that the environmental remediation phase has been completed. Monitoring of what it calls “a yellow sticky substance” is ongoing.

SoundEarth couldn't confirm if work was completed on the site.

The deal was worth about $263 per square foot.

Brokers weren't announced. Frontier didn't respond to DJC queries.