Swickard's Portland tower buy prices the floors that are not office

Jeff Swickard, president and CEO of Swickard Group, has acquired a 90% interest in Park Avenue West for a commitment Connect CRE puts above $100 million, with the building's earlier owners, TMT Development among them, retaining the remaining 10%. Connect CRE calls the 30-story tower at 760 S.W. Ninth Ave. across from Director Park the fourth-largest building in downtown Portland, and the deal transfers control of a mixed-use asset while the original developer stays on the cap table rather than being cleared out.

Park Avenue West opened in 2016 with luxury apartments, office space and ground-floor retail that includes Pendleton Woolen Mills, and that mix is doing the underwriting work here. The residential and retail floors generate rent in the current market, while the office floors ask a buyer to hold a view on downtown Portland's recovery; a majority stake buys control of both at once. That lets the buyer own the recovery without having to defend an office-only basis while leasing proves itself out.

Connect CRE ties the tower to a Portland program it sizes at nearly $250 million over the past year, a run that also took in the U.S. Bancorp Tower, the Five Oak Building and BMW Portland in Goose Hollow. It describes Swickard Group as a diversified investment and operating company with interests in automotive retail, real estate and hospitality. An automotive and hospitality operator buying high-rise equity is a different counterparty from a fund buying the same asset, because the cash flow behind the bid comes from businesses that are not real estate and, on the evidence in the coverage, are not scheduled to return capital on a fixed date.

Downtown Portland's large towers need buyers who can hold, and an operating company with no stated fund life or redemption schedule is built for exactly that. Whether the patience was worth a premium is hard to test: the coverage does not give a price per square foot, the tower's occupancy, its in-place office rents or a cap rate, so the commitment reads as a directional bet on Portland more than a mark the rest of downtown can be appraised against.

Office has a clearing mechanism only where a trade prints, and undisclosed conversions and vacancy-adjusted comps are still doing the market's price discovery work. Park Avenue West is a partial print of that first kind. It puts capital to work on a building whose value rests on the floors that are not office, and it prices those floors at a single buyer's cost of capital.

The number worth watching is what a straight office tower downtown trades for next. TMT and the other minority holders sit on the only stake that would produce a second print inside this asset, and a $100 million-plus majority interest will not help appraise an office building with no apartments attached.