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February 18, 2014

Hudson Closes on $58M Seattle Buy

GlobeSt

Natalie Dolce

SEATTLE-Hudson Pacific Properties Inc. has completed the $57.7 million acquisition of an office and retail property known as "Merrill Place" located in downtown Seattle's Pioneer Square submarket, directly adjacent to the Company's First & King property. GlobeSt.com had previously reported that the company had entered into a purchase agreement to acquire the property last month.

Merrill Place consists of four interconnected brick and beam buildings spanning an entire city block and comprising approximately 179,000 square feet of office and ground floor retail, along with a 147-stall standalone parking structure. The property is currently 93% leased with approximately 52% of the leases scheduled to expire over the next four years.

Hudson Pacific Properties intends to implement an extensive repositioning of the property, including lobby and common area upgrades, new tenant amenities, an elevator modernization, and mechanical and electrical upgrades. Additionally, current zoning for the property allows for the potential development of a new office building fronting the soon to be improved Alaskan Way waterfront.

The firm plans to start the entitlement process immediately to allow for delivery of the new office building by 2017. According to Victor J. Coleman, chairman and CEO of Hudson Pacific Properties, "This asset is a great complement to our Seattle portfolio and represents a tremendous opportunity to leverage our operational, leasing and development expertise to create value for our shareholders."

According to a Q4 report from Kidder Mathews, the retail market in Seattle continues to improve with moderate positive absorption, new construction, and a strong investment climate for stabilized centers. "Retail development activity remains low as the market slowly re-absorbs excess vacant space and many retailers are reluctant to pay rents that would make new construction feasible. New development remains mostly build-to-suit, or owner/user oriented." Also, according to the firm's report, "mixed-use development in the Seattle and Bellevue urban cores continues to bring new retail space on the ground floors of apartment and office buildings. Much of this is simply complimentary shop space, but in some cases, there are more significant anchor or junior anchor components."

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