Downtown buildings' owner misses loan's $154M balloon payment

By Eric Pryne

Seattle Times business reporter

The owner of two prominent Denny Triangle office towers, Metropolitan Park East and Metropolitan Park West, has missed the deadline to pay back big loans it took out five years ago to buy the buildings, according to reports this week from the loans' servicers.
Walton Street Capital of Chicago was supposed to pay back all the principal a total of $154 million  when the two interest-only loans matured Nov. 6.
It hasn't, according to servicers ING Clarion and LNR Partners.
ING said Walton Street has defaulted on the Metropolitan Park East loan. LNR didn't use that word, but did label the Metropolitan Park West loan "non-performing."
LNR and ING are "special servicers" who deal with troubled debt. Oversight of the Metropolitan Park loans was transferred to them months ago because of concern Walton Street wouldn't be able to refinance when the loans matured.

A Walton Street principal did not return a call or email.  Twenty-story Metropolitan Park East and 18-story Metropolitan Park West, nicknamed the "Twin Toasters," were built in the 1980s just off Interstate 5 by longtime Seattle developer Martin Selig.
Walton Street, a private-equity investment firm, bought them in 2005 from Seattle's Benaroya Company for a total of $183 million, according to county records.
For financing, Walton Street borrowed about 80 percent of that sum from Greenwich Capital of Connecticut, which then packaged the debt with other real-estate loans and sold them to investors as commercial mortgage-backed securities.
King County now values the two buildings for tax purposes at about $135 million less than Walton owes on them.
LNR's notes on the Metropolitan Park West loan say a modification is under discussion. ING's notes on the Metropolitan Park East loan indicate the servicer and borrower are talking, and a new appraisal is in the works.
Walton Street is far from the only Seattle office landlord to encounter financial trouble in this difficult market.
Vacancies have climbed. Rents have dropped. Many owners are struggling with maturing debt. At least one building has gone back to the bank, and foreclosure looms for several others.
About 38 percent of Metropolitan Park West's 336,000 square feet and about 20 percent of Metropolitan Park East's 364,000 square feet is listed as available on commercial real-estate database Officespace.com.