November 17, 2005

Queen Anne High School sold for condo conversion

Photo courtesy of Lorig Associates Legacy Partners will convert the historic school into condos.

The heated competition for the Queen Anne High School Apartments ended Tuesday when Legacy Partners acquired the landmark Seattle property for $25.25 million.

Legacy Partners will spend between $5 million and $7 million to convert the neoclassical building into condominiums, according to Kerry Nicholson, senior vice president. It's Legacy first condo conversion project in the Puget Sound region.

The high school, which opened in 1909, is one of 37 Seattle buildings on the National Register of Historic Places. The school closed in 1981 and fell into disrepair. Five years later the Seattle Public Schools leased the ground under the building to Lorig Associates and Teutsch Partners. Lorig/Teutsch spent just under $10 million to divide it into 139 apartments.

The apartments range in size from about 500 to 1,150 square feet. The property is fully leased, and the average rental rate is $1.65 per square feet, according to Lorig.

Lorig's Harold Javete said the partners paid the district $7,250 a month during the term of the lease.

The district kept ownership of the building, but as part of the lease Lorig/Teutsch was allowed to convert the property to condos, with the district relinquishing ownership at that time. In exchange, the school district will receive 12 percent of the condo sale prices.

Nicholson says it's too early to say how much Legacy will ask for the condos. He expects the number of units to remain about the same.

Javete said the Lorig/Teutsch entity has had the property for so long that the tax consequences would make it too expensive for them to take on the conversion. So the partners decided in the spring to sell their interest.

"This is certainly a one-of-a-kind property, and when we began talking about selling Queen Anne High School, we saw a tremendous amount of interest from purchasers," Javete said.

Commercial real estate broker Bob Watson of R.M. Watson Co. put the deal together, representing both Lorig/Teutsch and Legacy.

"It was, in effect, a photo finish" among the suitors, said Nicholson, who declined to say who Legacy aced out. He added it was his long relationship with Bruce Lorig and John Teutsch that gave Legacy the edge: "They knew how we'd treat the Queen, so to speak."

Legacy will clean and repair the exterior. The entry will be shifted back to the north side of the property, though the fountain courtyard will be left intact, according to Nicholson. He says the bulk of the money will be spent re-doing the interiors to condo standards.

Equity for the project was obtained from AIG Insurance Co. and Legacy Partners. Bank of America is providing the rehab debt financing.

Johnson Architecture and Planning is the project's architect, with Susan Upton-Elkan working as the interior design lead. Redimensions is the general contractor, and The Scott Group is the project manager.

Miller Condominium Marketing is the sales and marketing firm.