Built in 1924 at 710 Second Ave., the property is the known as the Dexter-Horton Building. The City of Seattle acquired the building, which it occupied, in 1988 for $20 million. The city sold it to the Carlyle-Goodman joint venture in mid 2000 for $46 million with plans for a six-year phased move-out that will be completed later this year, Goodman Real Estate president George Petrie tells GlobeSt.com.

Published reports this week vary widely on how much the Carlyle-Goodman invested in the building beyond its purchase price. The figures ranged from $12 million to $34 million. The latter number would mean the building didn't appreciate in value over the last six years, which is unlikely. The $12-million figure is also unlikely because the building required substantial repairs after the Nisqually earthquake in February 2001.

When asked about the $34-million number, Petrie told GlobeSt.com that if that were the case "we wouldn't have sold it." The actual number is "about $20 million," he says.

According to archived press releases from Seattle-based Pinnacle Realty Management Co, which handled much of the renovations, the JV spent $20.5 million between 2001 and 2003, including $10.9 million on Nisqually earthquake-related repairs and work on the terra cotta exterior followed by an additional $9.6 million on new building systems and infrastructure, a substantial seismic upgrade and a further restoration of historical detail.

As for why the building is being sold now, Petrie says the company is a value-add player that buys and repositions properties for resale. "This is an example of a fully complete cycle for us," he says. "We always planned to sell and now is the appropriate time; it's fully renovated."

Local office brokers tell GlobeSt.com that value-add investments are typically held no longer than seven years. "They may have been looking at the market and saying 'this is as good as its going to get'," says one broker. "With the money they put into it, if they wait another year (they take the risk that) things might slow down."

While the building is 92% occupied, more than 15% of the building is being marketed for lease, in part due to the city's phased move-out. When the Carlyle-Goodman JV acquired it in June 2000, the city occupied the entire building. The city vacated close to 90,000 sf over the next 12 months, smaller amounts in 2002 and 2004, and approximately 130,000 sf in 2005. Petrie says the city will be completely out of the building this October when it vacates the 22,302-sf 10th floor.

The property was marketed for sale by the Sacramento, CA-based Palmer Team with assistance Dan Dahl and Dave Gurry of CB Richard Ellis, who have had the leasing assignment for the past six years and will continue to handle leasing for the new owner. The asking lease rate range for space in the building is $24- to $28 per sf per year, fully serviced.

Petrie says Goodman Real Estate is primarily focused on apartment properties but still has an additional 2 million sf of office properties in its portfolio that are in various states of renovation. The gain on the sale of the Dexter Horton Building will not be involved in an IRS 1031 exchange, he says.