Palisade Group

Thanks for the mention Peter Grant and The Wall Street Journal. The market is presenting many challenges today, from a wave of loan maturities to uncertain tenant demand, but with these challenges a market reset is underway that is providing tremendous opportunities for new investment.   "Meanwhile, a new breed of investors is stepping in to take advantage of prices on office buildings with eye-catching discounts. Palisade Group, a new firm formed by former executives at a unit of Blackstone, acquired a two-building office property in Seattle. The price was $47.5 million, about 26% less than what it went for 20 years ago." Spencer Rose Charlie Hobey David Moore

Thanks for the story Trepp, Inc. and The Rundown. Check it out below.   Tuesday, February 20, 2024   The Big Picture   Welcome to Trepp's latest offering – The Rundown. Enjoy and send any questions or comments to therundown@trepp.com. On Friday, we wrote about how the needle on the fear-greed scale, as it relates to commercial real estate, had moved into the greed section. Here's a solid example.    Three senior executives with the EQ Office operation of Blackstone Group recently formed Palisade Group. And they've completed their first investment, that of a 223,233-square-foot office complex in Seattle's South Lake Union area. The company, based in Los Angeles, and capital partner Sabal Investment Holdings bought the property from Stockbridge Capital Group and assumed a below-market rate mortgage that has another five years of term left. The venture paid $47.5 million, or $213/sf.    They didn't buy a fully stabilized property. The buildings, at 1000 and 1100 Dexter Ave. North, are 65% occupied. But they're in great condition as Stockbridge was a solid steward. They're in a market that has a 10% vacancy rate. Still, the buildings are offices, and most investors aren't keen on them.     But the definition of being opportunistic is to buy, very carefully, what others won't. Palisade noted that the building had been very well maintained and sits in a solid live-work area, as the Lake Union neighborhood is chock full of offices as well as residential properties.     Palisade has a healthy pipeline of opportunities that it's poring through, filtering the good from the bad. While it'll target a variety of property types across the country, its principals' background in the office sector could steer them in that direction.     "We have a lot of office properties that we're looking at," said David Moore, who along with Charlie Hobey and Spencer Rose are the company's managing principals. "There are outsized opportunities" in the sector. 

Well said Jeff Chaney

Palisade Group is pleased to announce the acquisition of 1000 and 1100 Dexter Avenue in Seattle, Washington. Thank you to Sabal Investment Holdings for your partnership and support in bringing this deal to the finish line. 1000 and 1100 Dexter is a two-building, Class A office asset totaling 223,233 square feet in Seattle’s South Lake Union submarket, one of the city’s premier urban live-work-play neighborhoods and a top-performing office and life sciences submarket.   Total purchase price for the property is $47,500,000, or $213 psf. The distressed pricing, which is considerably below replacement cost and recent sales transactions in the market, was facilitated by an assumable, low interest rate loan that was restructured as part of the transaction.   “1000 and 1100 Dexter is a rare opportunity to acquire a Class A office campus at a deeply discounted basis with attractive fixed-rate financing,” said Jonathan Mirkin, Managing Director of Sabal Investment Holdings. “We are excited to find such a unique opportunity like this in South Lake Union, and we look forward to executing our value-add improvements to the property.”   The deal marks the first acquisition by Palisade Group, recently founded by three former EQ Office (Blackstone’s US office platform) executives.   Located along Dexter Avenue, 1000 and 1100 Dexter enjoys access to various transportation options, including direct connectivity to Westlake, Eastlake and bike paths for the Fremont commuters, along with proximity to an abundance of walkable amenities and a neighborhood experience.   “We were attracted by the neighborhood location, proximity to Lake Union and its amenities, and the strong existing tenancy in the buildings. We are firm believers in the role of office in the future of work, and we will add creative improvements and services to 1000 and 1100 Dexter that help foster a dynamic office experience and create an environment where employees want to be,” said David Moore, Principal at Palisade. While best known for its technology and life sciences concentration, the South Lake Union submarket is positioned to benefit from tenant migration coming from the central business district due to stronger foot traffic and proximity to a vibrant residential neighborhood. The submarket has been one of the most active areas in the region for office investment sales over the last two years, boasting a Class A office direct vacancy rate of 7.2%.    Newmark Co-Head of U.S. Capital Markets Kevin Shannon, Vice Chairmen Nick Kucha and Michael Moll, Managing Director Rachel Jones, and Associate Director Liam Ogburn represented the sellers, SBC and Stockbridge.