The first two buildings, both listed on the National Register of Historic Places, flank the north and south sides of Pioneer Courthouse Square, a bricked public space considered the heart of Downtown Portland. The third stands a few blocks away at SW 3rd Avenue and Morrison Street.

All three properties include a mix of high quality retail tenants, including St. John's Knits, Borders Books & Music, Wells Fargo Bank and Margulis Jewelers. The office tenants generally consist of attorneys, accountants, architects and engineers, including Fletcher Farr Ayotte, Interface Engineering and SRG Partnership. The portfolio's retail space is 100% occupied while the office space is 89% occupied.

"We're very bullish on the ground-floor retail in those buildings," Robert Scanlan tells GlobeSt.com, explaining retail accounts for only 17% of the buildings' space yet brings in 30% of the net operating income, with some of the retail rents still under market. "If the retail has a big upside from the standpoint of where rents could go, we could have a situation where 85% of the space only needs to get 50% of the revenue."

A longtime Portland company, SKB, a fiduciary for some 230 investors, hadn't acquired much of anything locally--until this year. In the past six months, the company has invested $69.06 million.

"Frankly, we've looked at Portland all along and the numbers never seemed to work; investors want certain yields, and if we can't get that, we don't buy it," Scanlan explains. "But our investors' risk appetite is down substantially in response to 9-11, Enron and the general economic collapse, and so our yield curve has come down."

In November, SKB paid $7.3 million for the 162,400-sf Sunrise Corridor Business Center, a 100% occupied warehouse/manufacturing business center with 40,707 sf of office space in Clackamas, Ore. In June, SKB acquired the 47,000-sf Uptown Shopping Center for $20.76 million. Located at 23rd Avenue and West Burnside, the gateway to Portland's northwest shopping district, Uptown came with 47 apartment units and a 55,000-sf developable pad for which SKB is now exploring a condominium development.

The brokers on the historic portfolio sale were CB Richard Ellis brokers Bill Palmer (Sacramento) and Tom Fellman (Portland).

Instant Insights /

SKB Buys Historic Downtown Portfolio for $41M

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