Seattle developer Selig expects to default on more office debt
It is unable to pay off a US$379 million loan tied to nine properties in and around downtown Seattle by April
ONE of Seattle’s most prominent developers is warning its lenders that stubbornly high vacancy rates are making it impossible to pay off its debt.
Martin Selig Real Estate disclosed it will be unable to pay off a US$379 million loan tied to nine properties in and around downtown Seattle by April, when the debt matures, according to commentary from the servicer on the commercial mortgage this week.
The office buildings, which span more than 1.6 million square feet, are about 33 per cent vacant on average.
The notice comes a month after the firm, run by Martin Selig, got a 60-day forbearance on a US$239 million commercial mortgage backed by seven buildings, after the loan came due in May, according to a separate filing this week.
The total value of those buildings, which span more than 1 million square feet, has plummeted by 43.7 per cent in the decade since the loan was originated, according to a March appraisal. Selig is trying to modify the loan before the end of the year, the filing added.
Martin Selig Real Estate did not respond to an e-mailed request for comment.
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Selig is one of many office developers across the country seeking leniency from lenders as a confluence of external factors – post-pandemic work patterns, high interest rates and depressed downtowns – has put much of the urban commercial real estate sector in survival mode.
Defaults on commercial mortgage-backed securities backed by US office buildings swelled to more than 10 per cent in November, up from 5.7 per cent a year ago, according to data compiled by Bloomberg.
Downtown offices have plunged by more than 50 per cent in value from their 2022 peak, according to MSCI, and roughly a quarter of Seattle’s downtown office space is vacant, brokerage CBRE reported.
This week’s notices on the two securitised loans came after Selig’s lender on two other buildings filed a default letter on Nov 15. The more than US$200 million loan from Acore Capital is backed by two Seattle office properties that Selig redeveloped from the historic Federal Reserve Building on 2nd Avenue and the Firestone Tire building at 400 Westlake Avenue North in South Lake Union. BLOOMBERG
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