Clise Holds Off Selling Prime Downtown Seattle Site, Cites Credit Crunch

Clise Properties has pulled 13 acres of prime Downtown Seattle land off the market despite significant investor interest because of the global credit crisis. The portfolio was assembled by the Clise family for the past 100 years and expected to be developed into a massive $7 billion project that would have changed the skyline of the city.As reported by CPN on June 15, 2007, Clise Properties hired Jones Lang LaSalle to market the portfolio, which could accommodate more than 12 million square feet of development and rival other major urban projects like New York City’s Rockefeller Center and London’s Canary Wharf.“We had tremendously broad global interest. Everyone saw a very exciting and significant opportunity,” Michel Seifer, a Jones Lang LaSalle managing director, told CPN today. “This is not a statement about the property or the Seattle market…to postpone and pull back for a little while is purely a capital markets decision. “We all collectively decided we would wait to see more clarity in the markets and then determine a strategy from there,” he added.Seifer said Jones Lang LaSalle and Clise Properties would be “monitoring the markets,” but noted they had not set a specific time frame for when negotiations might resume.Neither Seifer nor Clise Properties would name the potential investor identified only as an “astute international developer” by Clise chairman and CEO Al Clise in a press release. But Jennifer Forsyth, citing an unnamed source familiar with the negotiations, wrote in Thursday’s Wall Street Journal that Dubai’s Emaar Properties PJSC was the international developer Clise referred to. Other early bidders were Seattle-based Vulcan Real Estate, the real estate investment firm run by Microsoft Corp. co-founder Paul Allen, and Sun Cal Companies of Irvine, Calif., according to a story by Jeanne Lang Jones and Eric Engleman in Thursday’s Puget Sound Business Journal. Jones Lang LaSalle said it had received 15 final submissions to purchase the portfolio and had conducted more than 60 tours from qualified bidders.“Interested bidders had to best $600 million just to compete in this offering, and they did. We turned away several proposals that met the family’s target price but did not maximize the right concept. The project is focused on Clise’s steadfast intent on keeping the family’s original vision for this property intact,” David Doupe, a Jones Lang LaSalle managing director who is marketing the property with Seifer, said in the Clise press release.Seifer noted that they knew it would take a very well-capitalized development team to complete the transaction. Then the debt markets seized up two months after they began marketing the property. “The question is how you complete a project like this in this environment,” he said today. “Prudent investors in terms of the way they capitalize a project will look at capital and risk-based returns on that capital. Any investor will use some levels of leverage to do a project such as this.”The land spans seven city blocks in the Denny Triangle area. The Clise family began amassing real estate in the area after Seattle’s Great Fire of 1889. Building heights were capped in the 1980s. In 2006, city officials upzoned the area as a way to grow the urban core and make maximum use of new light and regional options for the Denny Triangle. Seifer said today the Clise family wanted to find “the right buyer that has the right vision for the project.” He noted they have been very patient in assembling the site and felt it was prudent to wait a bit longer now. “We are in no rush to sell a site that took 100 years to put together,” Clise said in the company release. “We do not take our decision lightly to withdraw from the market at this time, but we are not interested in disrupting the value inherent in the master plan for this site and plan to renew discussions only after the credit markets settle down.”