December 15, 2022

A bit more about that $322M Kiara sale

Photo by Holland Partner Group [enlarge]

The tower, on the corner of Denny Way, represents Ponte Gadea’s third big buy in Seattle.

As the DJC first reported yesterday, Ponte Gadea Group of Miami is the new owner of the Kiara apartment tower, at 111 Terry Ave. N. in South Lake Union. Oxford Properties Group sold the building for a bit over $322.2 million. (Both parties used LLCs in the deal.) The mystery is why, since it was only the summer of 2020 when Oxford paid about $320 million for the high-rise asset. (Original developer Holland Partner Group was then the seller.)

That's a remarkably short hold for Oxford, a large and savvy investor, and a very minor profit. No one would call the 41-story, 461-unit building a distressed asset. It's surrounded by offices filled by the likes of Amazon and Facebook. Ponte Gadea, the private investment arm of Spanish retail billionaire Amancio Ortega, is surely glad to have the four-year-old building. CBRE was its broker.

But why did Oxford sell? Update, Oxford said after deadline: “Oxford Properties accepted the offer presented by Ponte Gadea as it allows us to recycle our capital into other opportunities that align with our high conviction investment strategies in multifamily, life sciences, industrial and credit. It also grows our relationship with a valued partner in Ponte Gadea who we have worked with across the globe.”

Oxford, based in Toronto, is owned by the Ontario Municipal Employees Retirement System pension plan. It has about $82 billion (Canadian) under management. It also invests on behalf of other pension funds, among other sources of capital. It's not getting out of multifamily.

Oxford and Ponte Gadea have had past dealings. Back in 2020, the latter acquired a London apartment building from Oxford and a partner. And, earlier this year, Oxford and a pension fund sold Toronto's Royal Bank Plaza offices to Ponte Gadea for about $1.2 billion (Canadian).

The Kiara sale was worth about $908 per square foot, including the retail. Holland built the project, with Weber Thompson as the architect. It also has 374 underground parking stalls.

For Ponte Gadea, Kiara represents its third big deal in SLU. In 2019, it paid $740 million for the Amazon-leased Troy Block, and $415 million for the Facebook-leased Arbor Blocks.

Oxford has meanwhile been following a life-science path in Seattle, last year paying $119 million for what's now dubbed the Boren Labs building in the Denny Triangle. It was then brand-new and empty.

Oxford said after deadline: “Oxford remains committed to the Seattle market. We have recently completed our speculative office to life science conversion of Boren Labs in South Lake Union to provide the much needed and highly technical real estate infrastructure that supports Seattle’s early-stage life science venture community. The building opened this summer and has welcomed its first biotech occupants working across gene and cell therapy and vaccine discovery and has enjoyed tremendous early leasing success.”