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Originally published Tuesday, April 28, 2009 at 12:00 AM

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Proposed Seattle high-rise now faces foreclosure

A lender has foreclosed on part of the site of the proposed Heron and Pagoda towers site on Fifth Avenue in downtown Seattle.

Seattle Times business reporter

Backers of a mammoth downtown Seattle high-rise project, placed on hold last summer, now could lose part of the property in foreclosure proceedings.

About half the site of the proposed Heron and Pagoda towers will be sold to the highest bidder in June unless the developer pays off a past-due loan on the property, according to a notice filed with King County.

The $900 million project, across Fifth Avenue from the Westin Hotel between Stewart and Virginia streets, was among the most ambitious Seattle skyscraper proposals to surface during the recent real-estate boom.

New York developer Multi Capital Group filed permit applications for two 550-foot towers with 1.2 million square feet of condos, retail, hotel and office space. But the project was postponed indefinitely last year, one of many victims of the faltering economy and credit crunch.

Now G4 Capital Partners, a New York lender, says a Multi Capital affiliate has defaulted on $13.7 million it borrowed in 2007 to help buy three of the five parcels that make up the project site.

Unless the debt is paid, those properties, which total about 0.37 acre, will be sold at auction in Bellevue on June 19, according to a public notice filed on G4's behalf last month.

Steven Gestetner, a Multi Capital vice president who also is the registered agent for ZRMBH, the Multi Capital affiliate that owns the three parcels, would not discuss the foreclosure notice Monday.

"I really don't have anything to say," Gestetner said.

According to the notice, ZRMBH's loan from G4 was to be paid in full last Dec. 1. In addition to the $13.7 million principal, the developer owes $900,000 in interest and fees.

Alec Carlin, of Hummingbird Advisors, which represented Multi Capital in permit proceedings, said he wasn't aware of the foreclosure filing until last week, even though it was filed March 20.

"I've been doing other things, and I've had this on a back burner," he said.

Carlin said that, so far as he knows, Heron and Pagoda is "still on hold, waiting for the economy to change."

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A spokeswoman for Washington Secretary of State Sam Reed said ZRMBH no longer is a legally recognized corporation.

It failed to file a required annual report last October and was administratively dissolved in February, she said.

Eric Pryne: 206-464-2231 or epryne@seattletimes.com

Copyright © 2009 The Seattle Times Company

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