OFFICE SPACE

Of the 40 properties on “death lists,” WW confirmed via public records that these 16 were in distress. Here’s where they are located, and what kind of trouble they’re in.

FIELD OFFICE

ADDRESS: 2035 NW Front Ave.

OWNERS: LLC controlled by Goldman Sachs and Lincoln Property MARKET VALUE: $62.7 million

SITUATION: Defaulted, loan going to auction

MASON EHRMAN BUILDING & ANNEX ADDRESS: 208 & 234 NW 5th Ave.

OWNER: PFP 6 Mason Ehrman LLC

MARKET VALUE: $7.1 million

SITUATION: Foreclosed

HISTORIC BANK BLOCK

ADDRESS: 309 SW 6th Ave.

OWNER: BDS IV OR Historic Bk Block LLC

MARKET VALUE: $27.1 million

SITUATION: Turned over to lender in lieu of foreclosure

6

COMMONWEALTH BUILDING

ADDRESS: 421 SW 6th Ave.

OWNER: Affiliate of Metropolitan Life Insurance Co.

MARKET VALUE: $73.9 million

SITUATION: Auctioned for $15 million on July 18.

See page 17 for more information.

7

ASPECT ON SIXTH

ADDRESS: 400 SW 6th Ave.

OWNER: REEP-OFC Aspect OR LLC

MARKET VALUE: $52.6 million

SITUATION: Transferred in November for $35.7 million, little more than half of what developers SteelWave and Barings paid in 2017.

See page 17 for more information.

8

J.K. GILL BUILDING

ADDRESS: 408 SW 5th Ave.

OWNER: LLC controlled by Urban Renaissance Group

MARKET VALUE: $7 million

SITUATION: In receivership

9

GREEK CUSINA (CLOSED)

ADDRESS: 418 SW Washington St.

OWNER: CPIF PDX LLC

MARKET VALUE: $3.2 million

SITUATION: Market value is 46% below last sales price ($6.1 million); lien.

10

HAMILTON BUILDING

ADDRESS: 529 SW 3rd Ave.

OWNER: Affiliate of Manchester Capital Management

MARKET VALUE: $7.4 million

SITUATION: In receivership

11

LOYALTY BUILDING

ADDRESS: 317 SW Alder St.

OWNER: Affiliate of Manchester Capital Management

MARKET VALUE: $15.9 million

SITUATION: In receivership

12

JACKSON TOWER

ADDRESS: 800-818 SW Broadway

OWNER: CRP Properties Inc., an affiliate of JPMorgan Chase

MARKET VALUE: $12.3 million

SITUATION: Defaulted, sold at auction for $7.5 million to creditor

13

SIXTH + MAIN

ADDRESS: 1050 SW 6th Ave.

OWNER: LLC controlled by Unico Properties

MARKET VALUE: $73.9 million

SITUATION: Market value is 13% less than last sales price ($85.1 million); lien.

14

HARRISON SQUARE

ADDRESS: 1800 SW 1st Ave.

OWNER: LC Harrison Square Owner LP

MARKET VALUE: $26.8 million

SITUATION: Market value is 49% less than last sales price ($52.8 million); loan modified.

15

THE CROSSING AT FIRST

ADDRESS: 2501-2525 SW 1st Ave.

OWNER: Pipco-on-the-Hudson Inc.

MARKET VALUE: $55.9 million

SITUATION: Defaulted, sold at auction 16

WATERMARK I & II

ADDRESS: 4380 S Macadam Ave.

OWNER: Clarity Ventures RF Portland

MARKET VALUE: $42.6 million

SITUATION: Market value is 26% less than last sales price ($57.5 million); loan extended.

BUILDING: Commonwealth Building

ADDRESS: 421 SW 6th Ave.

YEAR BUILT: 1948

SQUARE FOOTAGE: 219,742

OWNER: Commonwealth Property Owner LLC

SITUATION: Auctioned for $15 million on July 18

Another interesting thing about the death lists being passed around town is that none of Portland’s old-line real estate families is on them. There are no Menashes, no Goodmans. No Ameses. That may be because they’ve owned their properties for years and have no debt on them. Bob Ames, for one, says he owns his buildings outright.

“I’m laughing because I don’t have any debt,” Ames says. Most of the people in trouble are from out of town, and they often bought during the bubble years from 2014—when Portland rebounded from the last crash—to 2020. And they often used a lot of borrowed money, which was cheap at the time.

Case in point is the 14-story Commonwealth Building. Completed in 1948, it was designed by Pietro Belluschi, the Italian-born architect who became dean of the MIT School of Architecture & Planning and helped design New York’s Pan Am Building. Commonwealth put Portland on the architectural map because it was one of the first sealed, air-conditioned skyscrapers ever built. It was placed on the National Registry of Historic Places in 1976.

KBS Growth & Income REIT, based in Newport Beach, Calif., bought the Commonwealth from Unico (see above) for $69 mil- lion in June 2016. At the time, Commonwealth had 25 tenants and occupancy of 94%, bringing in $4.8 million a year, according to filings with the U.S. Securities & Exchange Commission. On average, tenants had about four years left on their leases.

KBS refinanced in 2018, taking an adjustable-rate loan of $51.4 million on the property from Metropolitan Life Insurance Co. Then, the pandemic and the protests hit, and tenants decamped. KBS found itself upside down. Loans were coming due, and the building was worth less than the loan amount, KBS said. Worse yet, the Federal Reserve raised interest rates to quell inflation, sending KBS’s adjustable mortgage to 10.66%, according to SEC filings.

KBS blamed Stumptown. “Given the depressed office rental rates and the continued social unrest and increased crime in downtown Portland where the property is located, the company does not anticipate any near-term recovery in value,” KBS chief financial officer Jeffrey K. Waldvogel said in a regulatory filing Feb. 16.

By March of this year, KBS figured the Commonwealth was worth less than half of the $47.8 million that it still owed MetLife. Like many real estate investors in this situation, KBS stopped making its payments and sent the keys to Commonwealth to MetLife, which sold it at auction to a MetLife affiliate, KBS said, likely meaning there was no other interested buyer, on July 18.

The auction price was just $15 million, according to Multnomah County records. That’s little more than a fifth of what KBS paid for a prized architectural property just seven years ago. And it gets worse. Commonwealth helped sink KBS entirely. In May, its shareholders approved a plan to liquidate, selling assets, paying debts, and closing the company.

BUILDING: Aspect on Sixth ADDRESS: 400 SW 6th Ave.

YEAR BUILT: 1961

SQUARE FOOTAGE: 221,232

OWNER: REEP-OFC Aspect OR LLC

SITUATION: Transferred to lender in November for $35.7 million, little more than half of what developers SteelWave and Barings paid in 2017.

Most Portlanders probably know Aspect on Sixth as the Camera World building because of the photography store on the first floor, which closed in 2016.

The building is a shape-shifter, and it’s been in trouble before.

First National Bank of Oregon bought the lot in 1957 and put up a five-story headquarters. First National (now part of Wells Fargo) moved out and sold the building to Schnitzer Investment Co. in 1972. Four years later, Schnitzer sold to First Farwest Life Insurance.

Farwest sold in 1987 but remained a tenant, and when the insurer became insolvent, it took its old headquarters down with it. The owner couldn’t pay the mortgage, and the building ended up in the hands of John Hancock Mutual Life Insurance in 1990.

Two years later, the building got a major face-lift. Investors added five new floors on top and clad the building in aluminum and stainless steel to make it look more modern.

In November 2017, SteelWave, a California-based developer, teamed up with Barings, a subsidiary of Massachusetts Mutual Life Insurance Company, to buy the building for $68 million. SteelWave spent millions more on renovation, upgrading the fitness center with something called “Moonshadow” glass that let gym users look into the lobby, but not vice versa.

SteelWave turned the Camera World into a bar and suspended a cube made of four flat panel screens that translate bar noise into colors and shapes, according to an account of the remodel by R&H Construction, the company that did all the work.

R&H says it rushed to get the building—by then called Aspect on Sixth—done by the spring of 2019. SteelWave and Barings scored in January 2020 when payments company Block, formerly called Square (for the little white boxes you swipe your credit card through at the coffee shop), signed a lease for the top three floors: 64,110 square feet.

John Ockerbloom, head of U.S. real estate at Barings, said the lease validated the business plan to “create a highly amenitized, lifestyle work environment that is attractive to today’s leading technology and creative companies.”

That same month, the federal Centers for Disease Control and Prevention reported the first case of COVID-19 in the U.S., just up Interstate 5 in Washington state.

It’s unclear from the paper trail what happened to Aspect. SteelWave and Barings didn’t return messages seeking comment. But records show that New York Life, the insurance company, often partners with SteelWave on projects, providing financing. Insurance companies like real estate because, usually, it throws off predictable revenue in the form of rent.

Roger Braxton, a vice president at New York Life, filed a document with Multnomah County showing that the company transferred a loan on Aspect to an LLC with the same address as New York Life on Nov. 9, 2022. The county’s website shows a sale around the same date for $35.7 million, little more than half of what SteelWave and Barings paid for Aspect just four years ago.

Someone lost money on the deal, likely SteelWave, Barings, and maybe New York Life. As the Death List shows, whoever that someone is, they’re not alone.