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SEATTLE-The non-residential portion of the two-year-old Millennium Tower in Downtown Seattle has traded hands. The cost of the 199,000-sf acquisition was $64.75 million, according to King County property records. The sale closed yesterday (Tuesday, June 3).

The seller was the developer, a joint-venture between local developer Greg Smith and his partners at Martin Smith Development Corp. and Boston-based Beacon Capital Partners. The buyer, Metzler North America, made the purchase on behalf of Hamburg, Germany-based Deutsche Immobilien Fonds AG, the real estate arm of German fund manager Union Investment Group. The asset will become part of Deutsche Immobilien Fonds’ open-ended real estate fund DIFA-GRUND, for which Metzler says it is planning to acquire more properties in Washington, California and British Columbia that are valued in excess of $50 million.

Millennium Tower is a 20-story mixed use building with ground-floor retail space and 13 stories of class A office space topped by six floors are high-end condominiums. The office space is 97% leased to investment banker Goldman Sachs & Co., biotech firm Amgen Corp. and the law firm of Orrick, Herrington & Sutcliffe. Goldman Sachs, however, is occupying only a portion of its space, and Amgen has completely vacated its space; about one-third of the office space in now on the sublease market, according to local brokers.

Metzler was represented in the transaction by Joel Aslanian, a partner at Seattle-based Meriwether Partners, which in November 2002 represented the seller in a $46-million, five year financing of the property by MetLife that paid off the construction loan from US Bank and Zions Bank. The MetLife financing had a six-month pre-payment prohibition; the all-cash acquisition was structured to coincide with the end of that six-month period.

Local brokers tell GlobeSt.com that although the $324-per-sf purchase price is a substantial number for Seattle, from the buyer’s perspective that is not the case, as the investment will have a 10% capitalization rate based on in-place rents. The average rental rate for primary leases in the building is in excess of $40 per sf, according to local brokers. “The developer did a fantastic job of leasing it up, avoiding dot-bombs and leasing to credit tenants at some high rates,” says one local broker.

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