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Tuesday, August 29, 2006 - Page updated at 12:00 AM

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UW acquires Safeco tower for $130 million

Seattle Times business reporter

Safeco tower, the 22-story monolith that dominates the University District's landscape, is being sold to the only institution with more clout in that neighborhood — the university itself.

The UW Board of Regents voted unanimously Monday to pay $130 million for Safeco's campus, including the tower. The deal will close in a month.

Safeco will lease back the space until January 2008, when university personnel move in.

"It secures the future of the university in a way that we couldn't have done otherwise," said UW President Mark Emmert, who attended the regents' meeting by phone.

The UW made its final offer to Safeco on Aug. 16 and subsequently learned that it was the winning bidder, Chair Sally Jewell told the regents.

Community business leaders like the idea of the UW owning the complex at the corner of Northeast 45th Street and Brooklyn Avenue, which includes Safeco tower, three adjacent buildings, two parking garages, a residential building with 29 units and two surface parking lots.

"We won't have to reinvent the wheel with a new tenant," said Teresa Lord Hugel, executive director of the Greater University Chamber of Commerce.

For residents concerned about university sprawl, she said, this represents a small, consolidated footprint for many employees. "I think it will be well-received."

University officials anticipate that the entire Safeco headquarters complex of about 510,000 square feet will hold 1,500 to 2,000 employees. It would have cost twice as much to build new office space, they said.

Vice Provost Harlan Patterson estimates that, beginning in five to 10 years, the university will "save a few million dollars a year" by owning rather than renting the office space.

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The university now rents 1.2 million square feet of space throughout the city. It expects to move employees from about 300,000 square feet of rented space that currently costs $20 to $24 a square foot. Employees from other parts of campus will relocate as well.

Patterson said he expects a significant portion of the building to be occupied by administrative staff whose jobs do not rely on close interaction with students on campus.

The university expects the purchase will eventually be financed with long-term bonds. Officials also will ask the state for about $7 million a year to operate and maintain the property.

To whatever extent the state funds are not available, the university will lease out some space to cover its expenses.

Safeco, which is consolidating its headquarters into leased space in downtown Seattle, expects a pre-tax gain of about $107 million on the sale, according to a filing it made Monday with the Securities and Exchange Commission. The insurer had a profit of $691 million last year.

As for a new name for the tower, Jewell joked with Bill Gates Sr., a UW regent who attended the meeting by phone, that "for $130 million, it'll be the Gates tower."

Melissa Allison: 206-464-3312 or mallison@seattletimes.com

Copyright © 2006 The Seattle Times Company

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