Three historic Old Town Chinatown office buildings have sold again, this time for $19 million to a local investment firm.

Portland-based NBP Capital was the buyer, acquiring the three buildings from Swift Real Estate Partners of San Francisco.

The three-building Old Town Chinatown portfolio has repeatedly changed hands for increasing prices in recent years. Swift purchased the portfolio for nearly $10.9 million in 2016. In 2014, John Beardsley purchased the three buildings from the Bill Naito Company for $8 million.

The portfolio consists of the Merchant Hotel, Captain Couch and the Norton House. The Merchant Hotel, 222 N.W. Davis St., was built in 1888 and renovated last year. The four-story building has 56,731 square feet. Captain Couch, 24-32 N.W. Second Ave., stands two stories and 17,742 square feet and was built in 1912. Norton House, 31-53 N.W. First Ave., was built in 1875 and is two stories and 13,626 square feet.

At each step, various owners have made improvements to make the buildings more attractive in Portland’s competitive creative office market.

Swift backed major upgrades at the Merchant Hotel, including a multimillion-dollar seismic retrofit and the addition of a tenant lounge, conference center and bike storage room. The Captain Couch and Norton House buildings received cosmetic upgrades to interior common areas.

The three-building acquisition represents the second phase of Swift’s sell-off of Old Town Chinatown assets. In September, the firm sold the New Market Theater and Blagen Block to NBP Capital for $32.2 million. NBP has now acquired a five-building office portfolio in Old Town Chinatown totaling 214,041 square feet for $51.25 million.

“Investors and developers have officially taken an interest in Old Town,” CBRE Vice President Charles Safley stated in a news release. “As you look at Old Town today there is a flurry of new capital investing in the future of this district. Everywhere you turn there is planned development, new construction, renovation projects and institutional investment coming in.”

Safley and Trevor Kafoury of CBRE’s Portland office represented both the seller and buyer. Nick Santangelo of CBRE’s Portland office and Brad Zampa, Michael Walker and Megan Woodring of CBRE’s San Francisco office secured $17.5 million in acquisition bridge financing.

The post Portland firm acquires Old Town office buildings appeared first on Daily Journal of Commerce.

Three historic Old Town Chinatown office buildings on the market since 2012 sold last month, according to a news release.

John Beardsley of Beardsley Development purchased the Captain Couch building, the Norton House and the Merchant Hotel for $8 million from the Bill Naito Company, according to NAI Norris, Beggs & Simpson Senior Vice President MaryKay West. The sale closed on Oct. 24, she said.

All three buildings are listed on the National Register of Historic Places, according to Melanie Cole, property manager with the Bill Naito Company. Each one has retail space on the ground floor and creative office space above. The Captain Couch building and the Norton House are 100 percent occupied, and the Merchant Hotel is 92 percent occupied, West said.

The Norton House, also known as the Overland Hotel, is at 31-53 N.W. First Ave. It was built in 1875 and once was home to saloons and retail businesses with first-class transient lodging on the second floor. The building received an extensive remodel in the 1970s.

The Captain Couch building, at 12-24 N.W. Second Ave., connects to the Norton House with a second-floor sky bridge. It was built in 1904 and formerly held saloons, stores and hotel space.

The Merchant Hotel block, at 222 N.W. Davis St., was built in 1880 and expanded in 1884. Several Japanese business then moved into the building, but were dislocated following World War II.

The post Three Old Town Chinatown buildings change hands appeared first on Daily Journal of Commerce.

When Sam Pishue sold the Couch Building in 2007, he never thought he would have to sell it again – especially in worse condition.

The Couch Building, at 27-33 N.W. Second Ave. in Portland’s Old Town neighborhood, was the home of one of Pishue’s first restaurants, the Jazz de Opus. Pishue sold the building to Portland developer John Beardsley, who later went bankrupt and defaulted on his loan. Pishue got the building back with a decreased value and a new tenant: a strip club.

“I kept it up for 32 years, and then in two years it went upside down,” Pishue said.

Now Pishue is restoring the building and again accepting offers. The asking price for the property is $1.89 million.

Pishue was a busy restaurateur when he opened Jazz de Opus in 1972. He earlier opened the Golden Key in Southeast Portland and later opened Sammy’s in Northwest. But Jazz de Opus and its attachment restaurant, Opus Too, were the most popular – a beer-and-wine jazz club that attracted celebrities like Bette Midler, Barbara Walters and players for the Portland Trail Blazers.

Pishue bought the Couch Building in 1975, transitioning from tenant to owner. He leased the building’s other spaces to boutiques and a café. He installed flower boxes and thousands of dollars worth of glass work to the building’s skylights and stained glass ceiling domes.

“The integrity of the building was absolutely gorgeous,” he said. “I was hands-on all the time.”

Pishue sold Jazz de Opus and Opus Too in 1989 and continued to operate other restaurants until he retired in 2006, shortly before he sold the Couch Building to Beardsley.

“I thought the sale went down well when it started. The price was right for me to sell. The contract was right,” Pishue said. “Beardsley did well for two years, paid what he needed to pay. And one day he didn’t make it, and it came down unexpectedly.”

“None of us would have believed that John Beardsley was going to go south,” said Sandra McLeod, a broker with Commonwealth Real Estate Cos. who also manages the building. “He was just too big a player.”

Beardsley accumulated a large portfolio of historic buildings in recent years, including the Yeon Building, the Oregon Pioneer Building and the U.S. National Bank Block. The Couch Building, a former mission hotel built in 1912, fit his profile.

But Beardsley, unable to keep up with his loans, filed for Chapter 11 bankruptcy in 2009. In the restructuring, he lost several properties, including the Couch Building, which was deeded back to Pishue. Beardsley did not return calls for comment on this story.

During the time Beardsley owned the building, tenants moved out and were replaced by a business called Spyce Gentleman’s Club.

The strip club is not out of place on the street. Old Town has become a different neighborhood since Pishue purchased the building in 1975. Night clubs have largely replaced the boutiques and wine bars, and it has become “more skid row than Old Town,” as Pishue puts it.

But Pishue said he has no problems morally with the strip club. “Everyone needs to do business the way they need to do it,” he said. However, he wouldn’t have rented to that type of operation because he wants a different atmosphere for the neighborhood, he said.

The problem for Pishue, he said, is the poor maintenance and changes to the building during the years it was out of his hands. The upstairs portion of the building was closed off. The building had some plumbing and electrical problems. And the stained glass and skylights upgraded by Pishue were covered up by the strip club.

“I’ve taken it very personally,” Pishue said.  “I was always hands-on, running and operating and being concerned with every inch of that building.”

The owners of Spyce – who say they are interested in purchasing the building but have not been able to work out a deal – noticed a difference between Pishue’s and Beardsley’s ownership.

“Sam’s a lot more aggressive in management style than Beardsley was,” said Walter H. Doss, president of Doss Consulting Inc., the corporate entity that owns Spyce.

Pishue has been repairing the property since regaining ownership. Among the changes, the front sidewalks have been repaired, and Spyce’s frontage – keeping in terms with its lease – has been upgraded. Spyce says it welcomes the changes.

“We’re proactive in everything we do,” Doss said. “We’re trying to make Spyce the finest gentlemen’s club in Oregon.”

The Couch Building has two floors and more than 10,000 square feet. It is 75 percent occupied with a net operating income of $146,860. Spyce’s lease ends in 2014 with an option to renew.

For details on purchasing the Couch Building, contact McLeod at 503-722-9587 or mcleodsandra@aol.com.

The post Couch Building for sale appeared first on Daily Journal of Commerce.

Three banking buildings in one block of Portland’s downtown may be historic, but they nevertheless possess the infrastructure to attract the city’s creative technology industry.

The U.S. National Bank Block, at 309 S.W. Sixth Ave., includes three buildings integrated as one, so tenants can walk from one building to another without stepping onto the street. The block has about 44,000 square feet of class B office space available.

The buildings include the U.S. National Bank Building, the Wells Fargo Building and the Motor Bank Building. John Beardsley, a Portland developer with a sizable portfolio of historic buildings, owns the block.

“People had a different attitude toward building when these were built,” Beardsley said. “These buildings were built by artisans, which are a combination of contractors and artists.”

The U.S. National Bank Building was built in two stages in 1917 and 1925 in the neo-classic, Italian Romanesque style. The Wells Fargo Building, built in 1906, was Portland’s first high rise – at 12 stories. Both buildings were constructed for their namesake banks and designed by Portland architect A.E. Doyle. The Motor Bank Building was built in 1956 and includes a parking garage shared by all three buildings.

“There are no two buildings that are alike,” Beardsley said. “People can have their own unique identity in a historic building.”

Beardsley considers the block the crown jewel of his portfolio; of his 18 buildings, the block makes up his largest and most prominent holding, he said. Last year, Beardsley’s company that owns the block fell behind on the loan and filed for bankruptcy, but that loan has since been reorganized.

Beardsley remodeled the block extensively after he bought it in 1999. The buildings, constructed for banks, were originally overbuilt. But the steel frame on the U.S. National Bank Building is now an asset to its telecommunications infrastructure.

The secure infrastructure was a necessity for datacenter company Lightpoint; its datacenter occupies 22,000 square feet in the Wells Fargo Building and is growing. There, the company provides space for servers, which attracted creative and technology firms enticed by the convenience of being close to their servers. Those firms include e-mail marketing software company Yesmail, consulting firm Ecos and online schooling company Insight Schools.

High-tech company Tripwire moved out of its third-floor space last year. That space, about 30,000 square feet over the entire block, is available. About 14,000 square feet of smaller spaces also is available.

The asking rate for space in the block is about $20 per square foot, per year, full service. Occupancy of the 210,000-square-foot block is approximately 80 percent.

For details on leasing space in the U.S. National Bank Block, contact Tiffany West with CB Richard Ellis at 503-221-4857 or tiffany.west@cbre.com, or Trevor Kafoury at 503-221-4896 or trevor.kafoury@cbre.com.

The post U.S. National Bank Block appeared first on Daily Journal of Commerce.

Historically, when the amount of vacant office space grows, landlords are forced to make more concessions and lower rent for proposed tenants to stay competitive. But depleting building values and capital constraints have forced a number of Portland landlords to reduce concessions and hold their lease rates steady.

This trend, combined with high foreclosure rates, is rendering some buildings unleasable. Such spaces are being labeled “zombie buildings” by Robert Bach, chief economist with Grubb & Ellis.

“Now that (values of) many properties purchased during the peak of the market have fallen below the balance due on the loan, some landlords are too capital-constrained to offer the tenant improvement allowances and other concessions necessary to attract tenants in today’s marketplace,” Bach said. “That’s good news for landlords who are in a good capital position – they have much less competition than the reported market statistics would indicate.”

In downtown Portland the vacancy rate for office space is at its highest point since mid-2006.

Ryan Pennington, a broker with Colliers International, said the problem is twofold. Some landlords don’t have the capital necessary to attract tenants and stay competitive. But other landlords with capital would rather maintain their current lease rates and concession packages and wait to fill vacancies. For these landlords, getting tied into a bad lease is more damaging than having vacancies, he said.

This trend may be skewing the vacancy rate somewhat, Pennington said.

“The vacancy rate is what it is,” he said. “What we are trying to get at now is: Why is it like this and how can we get businesses in buildings?

“If businesses can understand these constraints, they can work with landlords and create stipulations in the lease that offset them.”

The bankruptcy filing of John Beardsley‘s Fountain Village Development has left 18 downtown properties in limbo. This one bankruptcy case has rendered 15 percent of the Class C space in downtown unleasable due to their financial uncertainty.

Eric Haskin, a broker with Grubb & Ellis, said a business owner can protect itself by looking into the financial standing of the landlord and building owner.

“In large lease deals the proposed tenant could go as far as requesting a credit report and other financial documents,” Haskin said. “At the very least they should ask around and look at how the landlord’s other tenants and buildings are performing.”

Haskin also suggested putting tenant improvement and commission money into escrow accounts when the lease is signed. Then tenants will still get those funds if something goes wrong and the building doesn’t perform, he said.

Also, stipulations can be added to the lease. For instance, the amount of time landlords have to make improvements can be shortened, and lease termination agreements can be included if the building goes into foreclosure or is sold.

“The best way for capital-constrained landlords to still be competitive is rent abatement,” Pennington said. “This lowers the tenant’s effective rate but doesn’t lower the value of the building.

“What we are trying to do that is proving effective in these sorts of situations is creating more transparency between the tenant and the landlord. We are bringing the two together and discussing the actual economics of a lease more than we would in the past.”

Bach noted that foreclosure rates over the past year haven’t been as high as expected. This has actually increased the trend’s prominence because banks have been renegotiating loans instead of taking buildings back. As a result, owners maintain control of buildings, but also still face financial constraints.

“I think you are going to see this trend get worse until the leasing market hits bottom,” Bach said. “We are predicting that vacancy will hit bottom at the end of this year and lease rates during the first two quarters of next year.”

The post Portland sees trend of ‘zombie buildings’ appeared first on Daily Journal of Commerce.

Portland developer John Beardsley stands to lose several of his properties after filing for Chapter 11 bankruptcy in November.

A statement of disclosure filed March 19 includes a plan of reorganization, which outlines deeds in lieu of foreclosure, loan restructuring or sale of Beardsley’s 18 Portland properties.

Beardsley’s bankruptcy attorney Albert Kennedy of Tonkon Torp LLC said the reorganization plan isn’t final and most buildings will likely be deeded back to their crediting banks.

The reorganization plans calls for the Oregon Pioneer Building, at 409 S.W. Third Ave. in Portland, to be deeded bank to its lending bank, M&T Bank. The plan also calls for the Gearhart House, at 1768 Ocean Drive in Gearhart, Ore., to be sold by Beardsley with the proceeds going to M&T Bank.

The disclosure statement will face a court hearing May 10, but Kennedy said he doesn’t anticipate confirmation until mid-summer.

Beardsley’s company Fountain Village Development owns and manages 18 historic Portland properties.

• New Market Theatre Block, comprised of the New Market Theater Building and the Fountain Village Building, lent by Telesis Community Credit Union and valued at $5,650,000
• Patrick and Poppleton Buildings, lent by M&T Bank and valued at $2,140,000
• Loyalty and Hamilton Buildings, lent by M&T Bank and valued at $8,620,000
• Blagen Building, lent by M&T Bank and valued at $3,800,000
• Oregon Pioneer Building, lent by M&T Bank and valued at $6,430,000
• Postal Building, lent by M&T Bank and valued at $4,970,000
• Gearhart House, lent by M&T Bank and valued $1,025,000
• Yeon Building, lent by First Independent Bank and valued at $11,210,000
• Fountain Village Block, comprised of three buildings located at 15-27 S.W.
  Second Ave., 9-13 S.W. Second Ave. and 16 S.W. Third Ave., lent by First Independent Bank and valued at $5,690,000
• 5 NW 5th, lent by Fairway America LLC and valued at $810,000
• 11 NW 5th, lent by Riverview Community Bank and valued at $1,059,400.19
• Jazz de Opus, lent by Sam and Michele Pishue and valued at $1,675,000
• 522 NW Thompson, lent by HMS Investment, Inc. and valued at $1,400,000

The post Beardsley losing buildings in bankruptcy appeared first on Daily Journal of Commerce.