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SEATTLE-Safeco is selling its long-time headquarters office tower and adjacent buildings in the University District to the University of Washington. The sale price for the 21-story building and nearby properties is $130 million; Safeco is expected to recognize a pre-tax gain of approximately $107 million.

The 279,500-sf tower and its three adjoining buildings total 511,000 sf. Other properties in the deal include a leased restaurant building (8,800 sf); two parking garages (727 cars) and two surface parking lots (1.7 acres); a small retail building (11,000-sf); and a 29-unit apartment building (13,400 sf) that it tied up in a lawsuit and may not end up being in the deal.

In January, Safeco agreed to sell its 46-acre, 1.4-million-sf campus here to locally based Microsoft Corp. for $209.5 million. At that time, it was still planning to consolidate its 3,200-person regional operations on and around its 5.5-acre headquarters campus in Seattle’s University District.

In March, Safeco scrapped plans to expand its headquarters campus near the University of Washington. Company officials said it wanted to lease rather than own space and be headquartered in the Downtown core.

Two months later, it leased 424,000 sf of office space in two Downtown buildings, 284,000 sf at 1001 Fourth Avenue Plaza (Hines) for its headquarters and 140,000 sf in the Second & Seneca Building (Equity Office) for its Northwest region office in Redmond. Both lease deals include naming and signage rights.

The sale to the University of Washington is expected to close at the end of September. The university plans to finance the acquisition with short-term notes that it hopes to take out with general revenue bonds authorized by the 2007 Legislature.

Safeco intends to lease back the buildings through the end of 2007. Safeco also is leasing back space in Redmond from Microsoft.

The university plans to shift about 25% of its 1.2 million sf of leased space around the city to the building in 2008. It also plans to shift some of its administrative operations off campus, freeing up space for teaching and research. It may also choose to lease the excess space to cover operating expenses the state will not.

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