Portland investment firm buys KOIN Center

The 25-year-old KOIN Center has 411,000 square feet of office and retail space, and is one of downtown Portland’s most recognizable buildings. It is home to First American Title Insurance, lucy ctivewear, Willis of Oregon, ECONorthwest and KOIN-TV.


PORTLAND, OR--The KOIN Center -- most of it -- has been sold again, this time to a hometown investment firm with more links to China than Portland.

American Pacific International Capital, Inc., in its first play in the region, has plucked 19 floors of the 30-floor building out of foreclosure.

Terms of the deal, which closed Tuesday, were not revealed. But real estate sources indicate the sale price was between $50 and $60 million. California Public Employees' Retirement System, or CalPERS, bought the 25-year-old tower in 2007 for $108 million but defaulted this year on a $70 million loan.

"It's essentially the biggest short sale that's occurred in Portland this year," said Gene Grant, (middle right photo) an attorney with Davis Wright Tremaine in Portland who represented the buyer. "The lender did not get everything they were owed, but they got enough."

New York Life Insurance had taken control of the building after suing the building's owner this summer. The insurer claimed CalPERS failed to make its July mortgage payment on the building.

CalPERS had partnered with Commonwealth Partners, a large Los Angeles real estate investment firm, to buy KOIN Center. The entity, FPS KOIN Center, borrowed $70 million from New York Life in August 2007.

The tower boasts 411,000 square feet of office and retail space and one of downtown's most recognizable buildings. It is home to First American Title Insurance, lucy activewear, Willis of Oregon, ECONorthwest and KOIN-TV. Its top 11 stories of the building are condominiums and were not included in either sale.

Another Portland real estate investment firm, Capstone Partners, considered making a play for the building. But Jeffrey Sackett, (middle left photo) a principal with Capstone, said it could not make the deal pencil out at its asking price.

"We were led to believe by the brokers they had a couple offers north of $50 million that seemed solid," Sackett said. "We didn't feel comfortable...for a lot of reasons. It's a very difficult investment market environment at this point. There's a great deal of leasing risk. There's just very, very low demand for Class A office space."

Still, Sackett said, the deal for what he called a "trophy asset" bodes well for the region's beleaguered commercial property market.

"Any trade is a good thing because it starts to establish value," he said.

APIC, with offices in Portland's World Trade Center, is little known in Portland real estate circles but active in China. It started a palm oil production factory in Chaozhou, China earlier this year and resurrected a soybean oil plant from bankruptcy in Shantou.

Earlier this year, former U.S. Labor Secretary Elaine Chao (bottom left photo)  helped APIC break ground on a development partnership in Shantou to build 92,000 square meters of hotel rooms, condos and retail space called Ocean Panorama.

AIPC president Wilson Chen did not return a call seeking comment.

Grant, who has worked on deals involving KOIN Center since its construction, said he hoped the purchase injects some life into commercial real estate, where owners have seen building values dive below the amount they owe lenders.

"What's happening in commercial real estate is really exactly what's happened in residential real estate," Grant said. "It's just a delayed reaction. We're just now starting to see the commercial short sales."