High-Rise Office and Multifamily Apartment Buildings

Summary

Nova’s Capital Markets Group was commissioned to provide PCAs on a portfolio of high-rise office and multifamily properties for a major life insurance company. Included within the mix of assets was the McGuire Apartments, a $32MM, 25-story, mixed-use development constructed in 2001, within the Belltown neighborhood of downtown Seattle.

Highlights

Preliminary research conducted by Nova called for multiple investigations into alleged construction defects, including premature corrosion of slab tendons, spalled concrete floor slabs, and irregularities with the placement of steel within the floor slabs. Nova immediately advised the client of these past construction issues.

The lender, upon review of Nova’s findings, delayed funding the loan application until a scope and cost for the mitigation of defects could be determined. In March 2010, the borrower’s engineer determined that the cost to mitigate (as high as $80MM) exceeded the cost of construction. Residents and tenants were asked to move from the building, and in April of 2011, the McGuire Apartments building was demolished, just ten years after construction.

By commissioning a Property Condition Assessment from Nova, the lender avoided funding a large loan secured by a high-rise asset that was demolished within two years of the proposed closing.

For further information on our Property Condition Assessment services click here.