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Gateway Center auctioned off
By ERICA HALL
The bankrupt Gateway Center business park fetched almost $13.5 million at an auction on the steps of the Washington Mutual building in downtown Seattle last Thursday.
The centers lender was the highest bidder, beating out the next-highest bid of about $13 million.
While the property, located off South 320th Street near Interstate 5 in downtown Federal Way, has changed hands, shoppers shouldnt see any changes in the retail park that Cold Stone, Great Harvest Bread Company, Galaxy Theater, Marlenes Market and Deli and others call home.
Bidding for Gateway started at $10 million and went up in increments of $250,000 before dropping to increments of $100,000, said Mark Clirehugh, senior vice president of Insignia Kidder Mathews, a commercial real estate firm. He attended the auction.
Rival bidders brought the price to $12.95 million before the lender stepped in at the last minute with a $13.47 million bid, said Federal Way Chamber of Commerce chief executive officer Tom Pierson, who also attended the auction.
About 25 people gathered for the auction. In addition to the two bidders, bankers and representatives of businesses at Gateway also attended.
Gateway Center still owed $14.5 million to the lender when a trustee appointed by a federal judge in U.S. Bankruptcy Court put the property up for auction last week as part of foreclosure.
Taking a foreclosed property to auction is unusual, but an auction can do wonders for a difficult property one thats in a remote or awkward location, has site restrictions or has been on the market for a long time. Normally, they wont go that far, Clirehugh said. Once youre upside-down on a property, usually you deed it back to the lender.
Clirehugh and Pierson said the lender probably will sell the property at a loss from the $14.5 million still owing on the promissory note, but potentially for more than expected.
Clirehugh said prospective buyers at the auction Thursday took the bidding higher than fair-market value. That makes Gateway Center a little unusual. Taking a property to auction usually results in the lender getting less than market.
Gateway Center Retail was owned and managed by Federal Way Joint Venture, a partnership formed in the 1980s by FIR Associates, which provided the land, and South 320th Federal Way Partnership, which managed and developed it. Members of FIR Associates filed a petition for Chapter 11 reorganization in February 2003 on suspicion their partners in South 320th were mismanaging money.
Dan Casey, a principal in the South 320th group and the organizing force in a group of businesses and residents that opposed a new Sound Transit transit center near Gateway, said at the time the filing for bankruptcy was premature.
Though the former owners are no longer associated with Gateway Center, several businesses there have signed leases that will remain intact during the handover. Most (shoppers) wont see any difference, Pierson said.
Staff writer Erica Hall: 925-5565, firstname.lastname@example.org