Gaw Capital Buys Seattle Tower After Selling in Silicon Valley

A US affiliate of Gaw Capital bought an office building in Seattle for $49.5 million, according to public documents filed last week, the second major acquisition in the northwestern US hub by the Hong Kong private equity firm in recent months.

With backing from an unnamed Korean institutional investor, Gaw led the $711 million purchase of Seattle’s Columbia Center in August, and also in August, Downtown Properties sold an office development occupied by Apple in Cupertino, California.

This most recent Seattle deal by Gaw, which is known for its relationships with institutional investors in Asia, comes as market watchers wait for signs that large-scale Asian buyers are ready to move beyond traditional magnet markets in search of investment yield.

Downtown Properties Picks Out Building in Central Seattle

According to a deed filed in Seattle the acquisition of the Seattle Tower, a 27-storey property on the city’s Third Avenue was made by Los Angeles-based Downtown Properties, which is an associate of Gaw Capital Partners.

The seller was an entity related to US asset manager Invesco Real Estate, which received a price equivalent to $291 per square foot for the circa 1929 building, which had originally been known as the Northern Life Tower. Invesco had purchased the tower in 2011 for 30.5 million, according to local media reports.

The purchase by Downtown Properties gives the company a chance to reinvest some of the $165 million it made in August through the sale of the Cupertino Gateway in Cupertino, California to an affiliate of Prudential Real Estate Advisors.

The Gaw affiliate had acquired the office park structure in Silicon Valley in 2013 on behalf of institutional investors from Korea for $114.5 million, according to a statement from the company.

America’s Second-Tier Cities Await Chinese Giants

While the $49.5 million acquisition of the Seattle Tower is a relatively modest deal, the transaction gives hope for asset owners and agents in US cities not named New York or San Francisco that bigger things could be coming their way from China’s property hungry investors.

Despite rising asset values in New York Chinese investors have continued to show a strong preference for properties in the US commercial capital so far this year, and have demonstrated an inclination to invest into development projects in New York rather than to shop for stabilised assets in next-tier markets.

According to data compiled by Mingtiandi, Chinese investments of $50 million or more in the first three quarters of 2015 were up by more than $500 million in New York, compared to all of 2014. In San Francisco, such large scale deals were up by more than $200 million over the same period.

For other cities in the US, however, deals have been more elusive.

Through the first three quarters of 2015, Chinese investors put only around $51 million into high value real estate assets in Los Angeles, well off from 2014’s full year pace of $639 million. Chicago, which scored a big win with the acquisition by Cindat Capital Management of 311 South Wacker Drive in Chicago last year for over $300 million, has yet to see any large scale acquisitions in 2015.