Template revised January 10, 2019.
COMMISSION
AGENDA MEMORANDUM
Item No. 8f
ACTION ITEM Date of Meeting February 11, 2025
DATE: February 11, 2025
TO: Stephen P. Metruck, Executive Director
FROM: Kyra Lise, Director Real Estate Development
SUBJECT: STOC Ground Lease Amendment
ACTION REQUESTED
Request Commission authorization for the Executive Director to accept the assignment of an
amended long-term Ground Lease that is associated with our acquisition of International Place
(AKA the STOC property) located at 18000 International Blvd. SeaTac, WA.
EXECUTIVE SUMMARY
On October 22, 2024, the Commission approved the purchase of a three-building office property
portfolio known as International Place (AKA the STOC property). That purchase will include two
11-story streel-frame buildings, and a low rise four-story concrete building, totaling 548,700
square feet, together with 1,959 parking stalls, and the tenant position in a long-term ground
lease with Boyson, LLC as well as a 2-acre fee property commonly referred to as the Bow Lake
parcel. The Port’s acquisition of the property is set to close on February 28, 2025.
As shown below, the Commission approved Purchase and Sale Agreement (PSA) subject to an
amendment to the Boyson, LLC Ground Lease, such amendment to take place prior to closing.
The current tenant/owner is set to finalize an amendment in line with our closing date.
As the Purchase and Sale Agreement states:
(vi) Ground Lease Amendment. Purchaser and Ground Lessor shall have executed and delivered
to Escrow Agent an amendment to the Ground Lease, in form and substance reasonably
acceptable to Purchaser and Ground Lessor (together with any recordable memorandum thereof,
the “Ground Lease Amendment”), modifying the leasing covenant and rental provisions of the
Ground Lease to reflect the rent-free occupancy of all or a portion of the Premises by Purchaser
following Closing.
The remaining term of the ground lease is 90 years.
COMMISSION AGENDA – Action Item No. 8f Page 2 of 3
Meeting Date: February 11, 2025
Template revised June 27, 2019 (Diversity in Contracting).
The nature of the unamended ground lease provides for rent due to be calculated based on the
proceeds of commercial leasing activity in the buildings. However, once the Port comes to own
the property, much of the property will instead be occupied by the Port of Seattle and its
employees and contractors. Therefore, the parties have agreed to amend its terms to recognize
the change in the nature of the Port’s purposes for the building to reduce challenges due to
ambiguity in the calculation of rent due. In addition, the principals of the ground Lessor, Boyson,
LLC have asked for a right of first refusal where the Port ever to offer the 2-acre Bow Lake parcel
for sale.
The nature of the right of first refusal is that in the event the Port decides ever to surplus the Bow
Lake parcel, the Ground Lessor would have the first priority to purchase the property on terms
acceptable to the Port. Further Commission action would be required to take place in order to
sell it. To accommodate the owner’s request, a ROFR will be included in the amendment to the
ground lease. This change will have with no effect on the terms of the sale between the current
owner/ground lease tenant URG and the Port. As part of the closing documentation, the Boyson
ground lease thus amended, would be recorded against the property in favor of the ground
lessor.
JUSTIFICATION
As stated above, the Port requires certain provisions of the Ground Lease be amended. Without
these changes, the Port would potentially be limited in their ability to occupy space at STOC and
the rent due under the Ground Lease would be ambiguous and potentially represent a liability to
all parties.
The so-called ROFR on the Bow Lake Parcel in the favor of Boyson, LLC is a modest
accommodation in order for the Port to receive the required changes to the Ground Lease. There
is little likely to induce the Port to sell as the property is contiguous with the premises of the
current ground lease making it disadvantageous to the value of the property to separate the
parcel from the larger property.
Diversity in Contracting
No new contracting opportunities applies to this request.
COMMISSION AGENDA – Action Item No. 8f Page 3 of 3
Meeting Date: February 11, 2025
Template revised June 27, 2019 (Diversity in Contracting).
ALTERNATIVES AND IMPLICATIONS CONSIDERED
Alternative 1 – Accept the assignment of the amended Ground Lease which includes providing
ground lessor a right of first refusal over the Bow Lake parcel.
Pros:
(1) Ensures that the necessary amendments to the Ground Lease are made prior to closing
on the property.
(2) Abides by the terms and conditions of the executed Purchase and Sale Agreement.
Cons:
(1) Encumbers the Bow Lake parcel which may impact future property surplus actions.
This is the recommended alternative.
Alternative 2 – Do not include the right of first refusal in the ground lease amendment.
Pros:
(1) May preserve flexibility when marketing the Bow Lake parcel in the event the Port
decides to surplus it in the future.
Cons:
(1) Could delay the Port’s plans of ownership.
(2) Could lead to a dispute with the ground Lessor.
This is not the recommended alternative.
FINANCIAL IMPLICATIONS
Approving this request will have no incremental impact to the 2025 Budget.
ATTACHMENTS TO THIS REQUEST
(1) Ground Lease
(2) Purchase and Sale Agreement
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS
October 22, 2024 – The Commission authorized execution of the STOC Purchase and Sale
Agreement
