The Pan Pacific Hotel in Seattle, part of the 2200 Westlake mixed-use project, has been acquired by REIT Hersha Hospitality Trust for $79 million, or $516,000 per key.
The hotel was developed by Seattle-based Vulcan Inc. in 2006. Vulcan manages the businesses of Paul Allen, the co-founder of Microsoft and owner of the Seattle Seahawks and Portland Trailblazers.
“The Pan Pacific Hotel was one of our most pioneering projects,” said Ada M. Healey, VP of Real Estate at Vulcan. “It helped put South Lake Union on the map and was a key asset that helped attract numerous tenants and investment to the neighborhood.”
“We are pleased to enter the dynamic Seattle market with the Pan Pacific Hotel. Greater Seattle is home to iconic Fortune 500 companies, such as Amazon, Costco, Microsoft and Starbucks, and boasts one of the country’s fastest growing economies, reporting the second highest annual GDP growth rate among major MSAs at 4.1% from 2010 - 2015. The Pan Pacific’s prominent location as the closest independent lifestyle hotel to Amazon positions the hotel to be the property of choice for the new-economy businesses in the burgeoning South Lake Union submarket. South Lake Union has become the most desirable neighborhood in Seattle, with transformational office, retail and residential development all adjacent to the hotel. Today, the city has approximately 46 million square feet of office space with an additional 6 million square feet under construction, and more than 14 million square feet in various stages of entitlement. The Pan Pacific’s superior location, luxury amenities, and well-appointed meeting space, combined with the submarket’s embedded corporate and leisure demand provide meaningful upside. We expect to leverage the expertise garnered at our other independent lifestyle hotels to add to the success of The Pan Pacific. Working with Vulcan, Seattle’s most respected and innovative real estate developer, gave us comfort as we enter one of the best real estate markets in the United States. We are appreciative of Vulcan’s professionalism and support and look forward to becoming part of the vibrant Seattle community,” said Jay Shah, Hersha’s CEO.
The Pan Pacific Hotel is located across the street from Amazon’s global headquarters, at the North end of Seattle’s CBD. The hotel is also within walking distance to Seattle’s leisure attractions, including The Space Needle, The Museum of Pop Culture and Chihuly Garden and Glass.
According to the release, Hersha intends to engage in a tax-deferred reverse like-kind exchange with respect to the company’s acquisition of the hotel, and the expected disposition of the suburban West Coast portfolio of three Hyatt Houses anticipated to close in July 2017. The disposition of the suburban West Coast portfolio is forecast to generate approximately $65 million in taxable gains, which will deferred by the acquisition of The Pan Pacific. The suburban West Coast portfolio sale is subject to customary closing conditions, with no assurance that this transaction will close within the expected time frame, or at all.
Hersha's portfolio includes 53 hotels totaling 7,943 rooms and are located in New York, Washington, D.C., Boston, Philadelphia, Miami and select markets on the West Coast.