Real Estate Deals

[kz1000ps]

(formerly "One Federal bought for $514 million")

Tishman Speyer closes on One Federal acquisition


Boston Business Journal - 2:41 PM EDT Monday

Tishman Speyer closed on its $514 million acquisition of the office tower located One Federal St. from Jamestown.

Jamestown, a real estate investment and management company with offices in Atlanta and Cologne, Germany, was advised by New York's ING Clarion. The sale transaction was brokered by Cushman & Wakefield of Massachusetts Inc.

The acquisition of the 1.1 million-square-foot, 38-story office tower is among the largest investment sale deals in Boston this year. The tower is 99 percent leased and lists tenants such as Bank of America, State Street Corp., Credit Suisse First Boston, Bear Stearns and Fidelity Investments.

The building was initially completed in 1976 as the headquarters for Shawmut Bank and thoroughly renovated and modernized in the mid-1990s and upgraded further in the last two years. The property spans a 1.3-acre city block bounded by Federal, Franklin, Devonshire and Milk streets.

Tishman was founded in 1978 and has acquired or developed a portfolio of more than 77 million square feet valued at more than $24 billion. Tishman also owns an interest in another Financial District tower at 125 High St.

[bosdevelopment]

514 bux a foot. That cap rate is going to be thiiin

[TheBostonian]

Originally Posted by kz1000ps

The tower is 99 percent leased...

[bosdevelopment]

Originally Posted by TheBostonian

yeah but for how long? and at what rates? It may be a safe investment, but its return will be comparable to a c.d at your local citizen's bank.

[TheBostonian]

I'm just pointing out that it has such low vacancy compared to the rest of the market. It doesn't even seem like a very appealing building.

[kz1000ps]

Originally Posted by Boston Business Journal

State Street Financial Center sold


Boston Business Journal - 9:36 AM EST Tuesday
The sale of the State Street Financial Center is complete.

Pennsylvania-based American Financial Realty Trust (NYSE: AFR) and joint venture partner and minority owner, IPC US Income Real Estate Investment Trust, said in November the building would be sold for $880 million - $175 million more than what the real estate trust paid two and a half years ago.

The final sale price of the one-million-square-foot building in Boston's financial district was $889 million, according to a release from the company. The property was sold to an affiliate of Fortis Property Group.

American Financial said it expects net proceeds of about $200 million from the sale. The proceeds will be used to pay down company debt as part of a repositioning plan, American Financial said in a statement.

The building was put up for sale sometime after August 17th when American Financial decided it was going to reposition some of its assets. The Boston Business Journal first reported American Financial had hired Eastdil Realty Inc. to sell the building for more than $800 million in October.

After buying the tower for a record $671 per-square-foot in February 2004, American Realty Trust sold 30 percent of its ownership stake to the Canadian real estate investment trust, IPC US Income Commercial Real Estate Investment Trust, for $60.3 million. At that time the tower was valued at $763.5 million.

The building is entirely leased to State Street Corp. for 20 years.

[bosma]

GlobeSt.com Commercial Real Estate News and Property Resource
UPDATE Last updated: December 29, 2006 12:20pm
Hancock Tower Sells in $3.3B Portfolio Buy
By Beverly Ford
BOSTON-The Back Bay?s landmark John Hancock Tower has been sold by locally based Beacon Capital Partners as part of a $3.3-billion transaction. New York-based Broadway Real Estate Partners purchased the building which was part of a multi-asset portfolio.
The 10 buildings in the portfolio deal are the John Hancock Tower; the 900,000-sf Citigroup Center at 444 South Flower St. in Los Angeles; 1615 L St. NW and 2445 M Street in Washington, DC; 1888 Century Park East and 10 Universal Plaza in Los Angeles; 200 Berkeley St., the Stephen L. Brown Building located at 197 Clarendon St., and 501 Boylston Street in Boston; and Bank One Tower in Denver, according to a release.

A real estate executive familiar with the transaction tells GlobeSt.com that Broadway plans to retain ownership of the 60-story Hancock tower but has flipped the two other Back Bay properties 501 Boylston St. and the nearby Brown and Berkeley building.

John Hancock Financial Services reportedly paid the New York owners $454 million for the Brown and Berkeley building. The 501 Boylston St. property was sold to an unidentified buyer for $380 million, about $80 million more than Broadway paid to acquire the property, the executive tells GlobeSt.com.

In a statement released by Broadway, Scott Lawlor, the firm?s founder and CEO, says the acquisition was ?a significant group of marquee properties in a highly desirable market.? Neither Lawlor nor officials from Beacon Capital could be reached in time for GlobeSt.com?s deadline.

Robert Griffin, president of Cushman & Wakefield of Massachusetts, which marketed the deal, called the sale ?one of the better portfolio sales ever transacted in Boston? and said it reflects a growing trend of portfolio sales that are expected to continue into next year.

[kmp1284]

Originally Posted by TheBostonian

It doesn't even seem like a very appealing building.

Are you on crack, this is one of the most appealing buildings in the city. The location is perfect, nice views all around, excellent finish, plus 1 Fed is a rather prestigious address. Just because something is a big brown box does not mean that firms aren't going to move in. I've been trying to get my hedge fund into 1 Fed since we moved downtown from Waltham in 2004.

[kz1000ps]

NYC tower buyers seek Big Apple rents here

Boston Business Journal - January 12, 2007
by Michelle Hillman - Journal Staff

New York investors eager to recoup the huge sums they laid out to buy Boston towers in recent years are determined to drive trophy space rents.

Proposals for high-end space in the Hancock Tower are being sent out at $80 per square foot, and properties in downtown Boston such as One Post Office Square are renting for $70 per square foot -- reflecting a surge in rent demands over the last 60 days. Both the Hancock Tower and One Post Office Square are being acquired by investment firms taking a more aggressive tack to commercial ownership in Boston.

Case in point: The Blackstone Group's $36 billion purchase of Equity Office Properties Trust (NYSE: EOP) will not close until next month, but rents have already gone up by $5 to $10 per square foot across the board in EOP's local properties. The private equity firm, based in New York City, sent the message to Equity officials that waiting for higher rents rather than filling the space with warm bodies was preferable. Blackstone has reached an agreement to purchase Equity's portfolio, which includes 11.4 million square feet in Greater Boston -- 7.4 million square feet in buildings in Boston's Financial District and Back Bay neighborhoods.

But, according to the Wall Street Journal, the purchase of EOP may turn into a bidding war with the expected entry of another investment team -- led by Starwood Capital Group Global LLC of Greenwich, Conn., and Walton Street Capital of Chicago.

The new owners of the Hancock Tower, the private real estate investment and management firm Broadway Real Estate Partners LLC, wasted little time raising rents by as much as $20 per square foot. One tenant at the Hancock Tower, Hill Holliday, recently was quoted more than $80 per square foot for a 140,000-square-foot lease renewal deal, said several real estate executives. Broadway closed on its $3.3 billion acquisition of a national portfolio of property which included the Hancock Tower and complex at the end of December.

Time will tell whether leases are actually signed at rents above $80 per square foot, since many tenants are just being hit with the figures.

One of the tenants that fell victim to escalating rents when it went to renew its lease with Equity Office Properties was the real estate firm McCall & Almy Inc. According to sources, the firm renewed its lease at $70 per square foot. Lenny Owens, executive vice president at McCall & Almy, wouldn't discuss how much his firm is paying to lease space at One Post Office Square in the Financial District, but said figures can be deceiving, depending on space improvement allowances built into deals.

That said, the recent uptick in the market across the board from downtown to Cambridge and the even the suburbs hasn't escaped him.

"We have noticed a significant bump in rents in terms of what's quoted out there," said Owens. "It's interesting to see how the big prices people are paying are affecting asking rents. The landlords that have come in paid significant prices and they need the rents to justify it."

Rents have been going up across the city as the market has improved, but newer landlords are taking advantage of more than market fundamentals in an effort justify costs.

"It's the reverse of the car sales pitch that our costs are less so we can charge you less," said Stephen Lynch, a principal at CBRE/Lynch Murphy Walsh Advisors.

Tenants are reacting to the rate increases by considering unconventional options, said William Barrack, managing director at Jones Lang LaSalle's Boston office. The alternatives include moving ancillary functions to the suburbs and splitting office space between Class A towers and Class B low-rise buildings.

Whether tenants will pay to stay is still an open question.

"They own assets in different markets where they're achieving those rents," said Barrack. "Can people pay these rents? Sure. They're doing it all over the world. People can do it. It's a matter of whether they want to do it."

With a few players controlling a large portion of the Boston office market, there is the risk of scaring tenants away if landlords get too aggressive, observers say.

The owners will push rents as much as they can to increase value but aren't going to go as far as to send tenants packing, said James Feldman, a real estate investment trust analyst at UBS in New York.

"They're only going to drive rents as long as the buildings stay occupied," said Feldman. "They're not going to drive rents so that people move out. They don't want people to move out. You can only do what the market will let you do."

Michelle Hillman can be reached at mhillman@bizjournals.com.
? 2006 American City Business Journals, Inc. and its licensors. All rights reserved.

For comparison's sake, the two big-ticket under construction projects in NYC, the New York Times and Bank of America towers, are signing deals at around $85 and $100 psf, respectively.

[kz1000ps]

Originally Posted by The Globe

Selling again, Beacon puts 15-piece package on block

By Thomas C. Palmer Jr., Globe Staff | January 18, 2007

Less than three weeks after selling the John Hancock Tower and other office buildings for about $3.2 billion, Beacon Capital Partners of Boston is moving to capitalize on the still-hot commercial real estate market by putting an even larger portfolio of properties on the block, according to a broker in the transaction.

The new sales portfolio doesn't include any trophy properties similar to the Hancock, but some of the 15 buildings enjoy prestigious addresses . The Massachusetts properties include 200 State St. and 116 Huntington Ave. in Boston, and Bay Colony Office Park in Waltham, which has 969,000 square feet and is 94 percent leased at rents among the highest in the suburbs.

A spokesman for Beacon Capital declined to comment.

But Rob Griffin, president of Cushman & Wakefield of Massachusetts Inc., which is marketing the assets in Massachusetts along with Eastdil Secured LLC of New York, said it is likely the group of Beacon buildings will be sold to one buyer -- just as Beacon's prior sale of buildings, completed in December, went to Broadway Real Estate Partners LLC of New York.

The commercial real estate industry has been an area of intense investor interest and merger activity. In the richest trophy hunt underway now, Vornado Realty Trust of New York and two partners yesterday submitted an offer worth about $21.6 billion for Equity Office Properties Trust, the nation's largest publicly owned office building owner and manager. Vornado and partners' $52 a share bid follows a $48.50 a share deal Equity Office had struck with the Blackstone Group.

Beacon Capital's strategy is to acquire high-quality properties in major markets where land and top-quality buildings are few, improve them, and sell them within a short number of years. Griffin said the genius of Beacon Capital, which is run by Alan Leventhal and partners, wasn't always apparent to others in the industry.

"There were times when Beacon was buying trophy assets and paying up for them, and people were scratching their heads," Griffin said yesterday. "But you can see that his strategy was a good one, and people are now paying a premium for a collection of assets."

The group now being sold, including buildings in California and Virginia, comprises about 10 million square feet -- about 3 million more than the last portfolio Beacon sold. Among the properties are 50 Beale St. and 100 California St. in San Francisco, and the Park Avenue Atrium and 100 Wall St. in New York City.

The current properties were purchased with the $1 billion Beacon Capital raised in its Fund 3, along with money borrowed to invest in real estate. The firm is raising its fifth fund, with a $3.5 billion goal.

David I. Begelfer, chief executive of the National Association of Industrial and Office Properties' Massachusetts chapter, said Leventhal and his partners are extremely savvy.

"They have been able to see value in their acquisitions where others had difficulty in justifying their prices, and it's apparent they see this as an optimal time to get that value out," Begelfer said.

Thomas C. Palmer Jr. can be reached at tpalmer@globe.com.
? Copyright 2007 Globe Newspaper Company.

[kz1000ps]

Originally Posted by BizJournal

Major rollover ahead for downtown office market

Boston Business Journal - February 9, 2007
by Michelle Hillman

In the next two years 40 percent of leases in Boston's commercial office market will roll over, forcing tenants to evaluate options during a time of rising rents.

Tenants with lease expirations between 2008 and 2010 will enter the Boston real estate market as available space continues to decline and few new options arise. "It's a significant window of rollover," said Gil Dailey, a senior director at Cushman & Wakefield of Massachusetts Inc. "Some of these tenants with 2008, 2009 (expirations) have already made commitments."

As a result, large tenants will have to consider putting their searches on hold or renewing or signing leases for proposed office buildings. Due to the lack of options, real estate experts say, tenants will either have to stay at the same addresses or play musical chairs, waiting until other companies move and free up space.

Large tenants in search of space before 2011 include: Hill Holliday, which is looking for about 120,000 square feet; Bank of America, 200,000 square feet; Brown Brothers Harriman & Co., 400,000 square feet; Citizens Bank, 240,00 square feet; Ropes & Gray LLP, 400,000 square feet; and JP Morgan Chase & Co., 220,000 square feet.

"Historically, 13 percent to 14 percent rolls each year," said Ted Wheatley, a senior vice president of the Texas-based tenant representation firm, The Staubach Co. "There is a bigger number coming out."

Tenants with leases expiring in 2010 are being advised to take a "defensive leasing strategy," said Wheatley, who is counseling companies to make short-term deals rather than rush into leases with high rents.

The goal is to preserve flexibility in case other options emerge, said Wheatley, who also is advising clients to negotiate termination or buy-out clauses.

"We've been in a pretty long upward cycle, historically speaking," said Wheatley. "We suspect while things look rosy, market conditions and economic conditions change frequently," which can lead to upward or downward swings in rent.

Tenants with leases expiring in 2011 can be a little more patient, said Dailey, since several new office buildings are expected to be open by then. For tenants with leases expiring in the next two years, Dailey said, he's advising those companies to get in the market now.

There have been deals in the city that have been done in the $70 per square foot (range)," said Dailey. "The range is as dramatic as the type of supply."

Tenants absorbed more than 1.4 million square feet of office space in Boston last year, said Ronald Perry, executive vice president at Meredith & Grew Inc. Perry said if the historical average of 1 million square feet is absorbed in the next two years, the overall vacancy rate will be reduced by half, or to about 5.5 percent. At the same time, about 1.5 million square feet of new office space is expected to be added to the market.

Rents quickly escalated by the end of last year, with signed lease rents spiking by 10 percent and asking rates jumping by 20 percent in trophy towers.

At the end of last year, rents for floors 20 and above in trophy towers -- where the vacancy rate was 5.3 percent -- were $50 per square foot to $65 per square foot. For floors 20 and below -- where the vacancy rate is 6.2 percent -- rents were between $40 per square foot and $50 per square foot, according to Meredith & Grew.

The Boston real estate market comprises approximately 57 million square feet between the Financial District and Back Bay. At the end of last year the overall vacancy rate was 11 percent, including sublease space, and the direct vacancy rate was 8.8 percent, according to Meredith & Grew.

Michelle Hillman can be reached at mhillman@bizjournals.com

http://www.bizjournals.com/albany/othercities/boston/stories/2007/02/12/story9.html?b=1171256400^1415258

[pharmerdave]

Ropes & Gray will move to top of Prudential Tower
Boston Business Journal - 12:52 PM EST Thursday, February 22, 2007
by Michelle Hillman
Journal staff
Ropes & Gray LLP announced Thursday it plans move its offices to the top floors of the Prudential Tower in 2010.
The Boston law firm said it signed a letter of intent to lease 400,000 square feet at the top of the Prudential Tower. The firm will relocate from its current headquarters at International Place in downtown Boston, where it occupies 350,000 square feet, to the landmark Back Bay tower.
Ropes & Gray notified its current landlord, the Chiofaro Co., on Wednesday that the firm had reached an agreement with Boston Properties Inc. (NYSE:BXP), the owner of the Prudential Tower.
The move by one of Boston's largest tenants to the Prudential Tower would fill space being vacated by the Gillette Co. Procter and Gamble, which owns Gillette, announced in January it was moving Gillette's corporate offices from the tower to the Gillette facility South Boston.
Gillette leases floors 35 through 49 and floors 8, 9, 26, 27 and 30, according to Amy Daniels, a spokeswoman for Boston Properties.
Daniels would not comment on which floors Ropes & Gray would occupy. "Boston Properties doesn't comment on any deal until a lease is executed," she said.
Floors 35 through 49 are the highest office space in the Prudential Tower; the 50th floor is the Prudential Center Skywalk and the 52nd floor is home to the Top of the Hub restaurant.
Though lease negotiations had been ongoing for some time, Donald Chiofaro, chief executive officer at the Chiofaro Co., said he wasn't surprised when he was notified that Ropes & Gray would move given the law firm's space needs.
Ropes & Gray will grow to occupy 700,000 square feet in the next 10 to 15 years, Chiofaro said. While Chiofaro could offer Ropes & Gray 300,000 square feet of future expansion space at International Place, it was not contiguous blocks. Ropes & Gray now occupies office space in several low-rise buildings as well as a large chunk high-rise space at International Place.
"I think their major concern was to be able to put the two groups of space together," said Chiofaro.
Ropes & Gray will occupy as many as 15 floors at the Prudential Tower, according to John D. Tuerck, a spokesman for Ropes & Gray. Tuerck said the move to the Back Bay will accommodate both clients and employees of Ropes & Gray.
"As was the case with our recent relocation of our New York office in Midtown Manhattan, we're looking forward to moving to a dynamic new space that can accommodate our future growth," said Brad Malt, chairman of Ropes & Gray, in a statement. "Like Midtown, Back Bay offers an appealing mix of central location, cultural and recreational amenities, and convenience for our clients, attorneys and staff alike."
Beside the need for a large block of contiguous space, Ropes & Gray also would have reportedly paid more to stay at International Place -- at least $60 per square foot -- compared to the rents being negotiated at the Prudential Tower. Daniels would not disclose the length or terms of the lease.
Chiofaro said while Ropes & Gray is leaving International Place, where it has been a tenant for more than 20 years, there couldn't be a better time in the market to have office space for lease. Chiofaro said he will entertain lease proposals for the space soon.
"I'm really excited about getting that space back in this market," said Chiofaro. "I'm really looking forward to leasing that high-rise bank. I don't mind losing this tenant at this time in the marketplace."
Michelle Hillman can be reached at mhillman@bizjournals.com

[kz1000ps]

Originally Posted by Business Journal

Eastdil opens Hub branch, hires Trammell veterans

Boston Business Journal - February 23, 2007
by Michelle Hillman - Journal Staff

New York-based real estate investment banking firm Eastdil Secured LLC has officially entered the Boston market, one long dominated by Cushman & Wakefield of Massachusetts Inc.

Last year Cushman & Wakefield completed $5 billion in investment sales. The firm's next closest local competitor, Trammell Crow Co., which was acquired by CB Richard Ellis Group Inc. last year, closed $2.1 billion in sales.

Eastdil, without any help from a Boston team, closed $4.4 billion worth of investment sales deals in Boston last year. Eastdil brokered the highest-priced deals, including the sale of One Lincoln Street for $889 million and the Hancock Tower complex for $1.74 billion.

To further solidify its local presence, Eastdil has hired the former investment sales team from Trammell Crow, less than a dozen in all, who now constitute Eastdil Secured's office at One International Place.

Eastdil Secured was born out of a real estate investment banking philosophy as opposed to a Main Street firm, said Roy March, chief executive officer of Eastdil. The firm brokers large portfolio sales with global implications, as opposed to local market deals, said March.

Robert E. Griffin Jr., president of the New England area for Cushman & Wakefield, said he saw the hiring of the Trammell brokerage team by Eastdil as creating one less competitor.

"We've always competed with Eastdil," said Griffin. "We used to compete with Trammell Crow. Now they're together. I think they're both respected and formidable competition."

But Griffin said the main difference between the two firms is how each approaches deals.

For Cushman & Wakefield, that means access to market data, a network of loyal clients and a deep bench of leasing agents within the firm. While Eastdil doesn't have the benefit of in-house brokerage services, the Boston office will work with real estate brokers on a deal-by-deal basis, said James McCaffrey, managing director of Eastdil's Boston office and one of the Trammell veterans.

"We will continue to do a lot of business with our former partners," said McCaffrey, referring to former Trammell Crow executives.

McCaffrey said it was important to Eastdil Secured to have a local team in Boston to serve its clients in the region.

"What's driving the market now is people making predictions about where rents are going, what the cost of tenant improvement packages are and just how much rental growth people can expect in the market," Griffin said.

The move to put "boots on the ground" in Boston will increase Eastdil's presence in the local market, said CEO March -- though the lack of a Hub office didn't stop Eastdil from landing deals with "global implications," he said.

March said the move to open a Boston office is intended to increase Eastdil's knowledge of the market, not necessarily market share.

Having already made an impact locally selling high-profile, landmark office towers, Eastdil Secured is now going after the middle market, said March -- deals in the $100 million to $200 million dollar range. McCaffrey and his partner, Peter Joseph, offer complementary midmarket services.

"It's a big part of our business but it's just not the part that you read about," said March.

Michelle Hillman can be reached at mhillman@bizjournals.com.

[kz1000ps]

Originally Posted by The Bizjournal

399 Boylston St. sold for $90M

Boston Business Journal - 11:18 AM EST Tuesday, March 6, 2007

Abbey Road Advisors LLC and Rockwood Capital Corp. confirmed on Tuesday that it sold 399 Boylston St. to San Francisco-based Shorenstein Properties LLC for $90.8 million.

The Boston Business Journal first reported the joint venture sold the Back Bay office building for a 62 percent profit in January. Abbey Road and Rockwood bought the Class A building for $55.5 million from Centremark Properties Inc. in July of 2005.

Abbey Road and Rockwood signed a 10-year lease renewal with IXIS ensuring the building would remain leased on a long-term basis. IXIS occupies about 40 percent of the building. The 228,626 square-foot, 13-story building is nearly 100 percent leased to 14 tenants including the largest, IXIS Asset Management Group.

Built in 1983, the glass and brick building is a half block from the Public Garden, Boston Common and the subway.

[IMAngry]

Beacon sells Channel Center piece at loss

By Thomas C. Palmer Jr., Globe Staff | March 6, 2007

Alan Leventhal's Midas touch didn't work on one property in Boston.

The Boston real estate executive and his firm Beacon Capital Partners LLC, which has made a bundle buying and selling big commercial properties such as the John Hancock Tower, unloaded a loser yesterday for $19 million less than it paid for it.

Beacon sold the mostly undeveloped portion of Channel Center -- two rows of old industrial buildings in the Fort Point Channel area -- to Commonwealth Ventures LLC of Southport, Conn., for $21.5 million. Beacon Capital had purchased the property about seven years ago for $40.5 million.

Beacon Capital executives declined to comment yesterday on the company's financial record with Channel Center.

Channel Center is a 16-building portfolio of the old Boston Wharf Co. buildings that Beacon acquired in 2000. Beacon redeveloped about 30 percent of the property in what it once projected as a $360 million project. But the renaissance of this industrial area has been slower in coming than Beacon Capital executives expected, and the fund they bought it in was coming to the end of its life, so they put Channel Center on the market.

Beacon Capital had planned a largely residential project for the location, previously called Midway; it did redevelop some buildings and built one new one, turning part of the complex over to an artists' nonprofit group.

One large space was envisioned as a performance theater and recently was leased by Longwood Events Corp., which puts on private parties. That space is called Artistry.

Commonwealth Ventures plans to immediately redevelop one of the two rows of Channel Center buildings, along A Street near Gillette Co. , into 280,000 square feet of office space, with retail shops on the first floor.

"Our goal is to get into the market as quick as we can," said Richard A. Galvin, president and owner of Commonwealth Ventures, which bought the property with partner GE Asset Management.

The remaining three buildings in the other row, to the east, will be redeveloped into residential space.

Beacon Capital also had secured permits to build two new office towers at the southern end of the existing Channel Center buildings, along A Street.

But Galvin said his firm won't undertake that development right away.

Although Channel Center condos didn't sell like hot cakes when Beacon Capital started work, Galvin said there is now increased redevelopment elsewhere in the neighborhood.

"There's a lot of terrific activity over there," he said. "The future is not very far away at all."

Commonwealth Ventures has done several projects in Providence, and is redeveloping the American Brewery Lofts in Jamaica Plain.

The property was purchased as part of Beacon Capital's first investment fund, and one real estate executive briefed on the firm's experience with it said that overall the investment fund had strong returns in spite of Channel Center.

Leventhal's company and his family's businesses have owned or run some of Boston's trophy property, including Rowes Wharf. Currently Beacon Capital is selling off most of its holdings in Boston, and it recently agreed to buy properties in the Washington, D.C., and Seattle areas.

Yet Leventhal said he remains bullish on Boston.

"We are confident in the future of Boston and are looking for more opportunities to invest," he said.

Beacon Capital's third investment fund had gross annual returns of more than 50 percent; as of last year the company was averaging 30 percent for all its five funds .

The company bought the Hancock tower and two other buildings in 2003 for $910 million -- and sold the tower alone this year for more than $1.3 billion.

Thomas C. Palmer Jr. can be reached at tpalmer@globe.com.

[kz1000ps]

these two buildings are at the NW corner of Clarendon, across from the Newbry

Originally Posted by the BizJournal

Bidders battle for Boylston St. bldgs.

Boston Business Journal - March 9, 2007

Well-capitalized buyers of commercial real estate appear willing to pay trophy prices for Boston's nontrophy buildings.

The latest example: A 182,332-square-foot office and retail property at 535 and 545 Boylston St. could sell for more than $400 per square foot. Two buyers -- Westport Point Capital and Teachers Insurance and Annuity Association-College Retirement Equities Fund (TIAA-CREF ) -- are slugging it out for the property, according to real estate sources.

Erin O'Boyle, managing partner at Westport, which has offices at 535 Boylston, confirmed her firm was bidding on the buildings. Marci Griffith Loeber of Cushman & Wakefield of Massachusetts Inc., which is selling the two 13-story buildings on behalf of Centro Watt, said she couldn't comment on a pending deal. But Loeber did confirm the price was at least $400 per square foot and that the sellers were close to picking a buyer.

A real estate source said there were more than 50 tours of the building.

The building's high sale price is being driven by its Back Bay location -- directly across the street from the renovated office and retail complex at 501 Boylston St. -- and the value of the ground floor retail, said Frank Petz, managing director of CBRE/Melody. Retailers generally pay more than of

"The Back Bay is everyone's sweet spot right now," said Petz.

-- Michelle Hillman

[statler]

Originally Posted by kz1000ps

Today's headline is brought to you by the letter "B"!

[kz1000ps]

Originally Posted by The Globe

Part of storied building up for sale

Owner may reap more for 3 floors of retail than it paid for all of 360 Newbury in '04

By Thomas C. Palmer Jr., Globe Staff | March 31, 2007

The owner of a well-known nine-story Back Bay office building is putting three floors of retail space -- which once housed Tower Records -- on the market and may get as much or more than what it paid for the whole building less than three years ago.

Boston Residential Group LLC is selling 46,000 square feet of retail space at 360 Newbury St., and based on recent comparable sales may draw offers between $45 million and $55 million, according to Cushman & Wakefield of Massachusetts Inc., the broker. Boston Residential bought all of 360 Newbury, one side of which is on Massachusetts Avenue, in 2004 for $47 million, and has since converted the six upper floors into 54 luxury condominiums.

The lower three floors are currently leased long-term to consumer electronics store Best Buy. Only six of the condos are unsold, the others having sold at prices from $600,000 to $3.6 million, or more than $800 per square foot.

"I bought it because I thought it was a marvelous trophy asset in Boston's most attractive neighborhood that was right for a repositioning," said developer Curtis R. Kemeny, chief executive of Boston Residential. His ownership partner in the building is the financial services company Morgan Stanley.

Rob Griffin, president of Cushman & Wakefield, said it's a great time to sell a well-leased building in the area. "The Back Bay is on fire," he said.

Griffin said the sale of the Back Bay's prominent John Hancock Tower for about $1.3 billion late last year seemed to have kicked off a selling trend, fueled by rising commercial rents in the area. Four buildings in the area have sold recently, including 399, 501, and 535-545 Boylston St. A building at 201 Newbury St. brought $1,700 per square foot.

"The sale of the Hancock and other assets trading had a chain effect on other people selling their property," Griffin said.

Kemeny's building, 360 Newbury, has a colorful 89-year history, and he is not new to it; he was project manager in the late 1980s when his former employer, Richard Cohen, owned the building and did a major renovation. Kemeny now lives in one of the penthouses.

That renovation is when California architect Frank Gehry and the Boston firm Schwartz/Silver Architects gave the building its current head-turning look, with lead-coated copper on two sides and two new top floors in mock Renaissance style, including a canopy supported by enormous struts. The 130,000-square-foot building won an award as Boston's most beautiful in 1991; it is hard to miss while driving into Boston on the Massachusetts Turnpike.

Built in 1918 on the site of a former horse-drawn cab company and next to Boston's east-west railroad corridor, 360 Newbury was originally called the Transit Building and was headquarters of the Boston Elevated Railway Co.

It was designed by Arthur Bowditch, who also did the Paramount Theater on Washington Street. Kemeny's architect for the renovation was ADD Inc., which is doing a similar project for him at Columbus Avenue and Clarendon Street.

Later the building became home to a lumber company, advertising agencies, photographers, and the E.U. Wurlitzer music company, where in 1982 famed rock 'n' roll drummer Carmen Appice conducted a master percussion clinic.

Tower Records had a long run in the retail space in the 1980s and '90s, but a Virgin Megastore replaced Tower in 2002, just as the era of digital music was beginning to torpedo the business model of traditional retail music stores. Virgin closed at the location in 2006.

Thomas C. Palmer Jr. can be reached at tpalmer@globe.com.
? Copyright 2007 Globe Newspaper Company.

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'Blackstone effect' sure to contribute to higher rents


Boston Business Journal - May 25, 2007
by Michelle Hillman - Journal staff

There's no one happier about The Blackstone Group LP's purchase of Equity Office Properties Trust than the folks over at The Chiofaro Co.

You see, the guys at the Chiofaro Co. have long been known as one of the most aggressive Boston landlords, always pushing rents higher than everyone else. It was a lonely place for partners Don Chiofaro, Ted Oatis and Chiofaro's son-in-law Mark Roopenian, who is in charge of leasing the 1.8 million square foot office complex.

"We're glad to finally have some company," said Roopenian. "For a long time that wasn't EOP's mantra. It's hard to be the Lone Ranger and now we're not the Lone Ranger anymore. The whole 'Blackstone effect' is a wonderful thing."

The Chiofaro Co. may not be the most expensive office tower owner in town, but the company is doing its best to hold its ground. Roopenian said he has executed leases in the $70 per-square-foot range in the first quarter. And those leases aren't even the highest for office space in downtown Boston. In fact, $70 and $80 per-square-foot deals are now common in Class A towers.

Why the sudden escalation? The Blackstone Group is taking a lot of heat for raising the bar. Shortly after purchasing Equity Office Properties (NYSE: EOP), with the 7.4 million square feet of real estate it owned in the Boston market, the New York-based private equity firm raised rents across the board by $10 per square foot. That was in January shortly before Blackstone Group's $36 billion purchase of EOP closed. Now rents asking rents in the same buildings are $80 per square foot compared to $70 per square foot just four months ago, according to sources.

But another New York-based landlord, Broadway Real Estate Partners LLC, is holding it own raising asking rents to $90 per square foot for space in the Hancock Tower, say sources.

Broadway purchased the 1.7 million square-foot icon as part of a $3.3 billion national portfolio that closed in December.

Last week Broadway closed on a second portfolio which included assets in Boston such as 200 State St. and 116 Huntington Ave. If Broadway's actions at the Hancock are any indication of the private investment and management firm's plans for its Boston-area holdings, tenants can expect rents to rise.

Of course, rising rents goes beyond the Blackstone effect.

According to a first market report by Cushman & Wakefield of Massachusetts Inc., the overall vacancy rate for all of Boston was 9.4 percent. In real estate broker speak, when vacancy rates drop below 10 percent it's a sign the market has reached equilibrium.

The lower vacancy rates go the higher rents climb. At International Place, which Cushman & Wakefield helps lease for the Chiofaro Co., the vacancy rate dropped to 2.5 percent from 25 percent in the last three years, said Roopenian.

Sky-high rents are closer than tenants may realize. After years of too much space for too few tenants, downtown Boston and the Back Bay are near capacity. With no new office towers scheduled to open until 2010, landlords with office space to spare are in the driver's seat.

One year ago, a tenant looking to lease space at International Place could strike a deal for $50 per square foot, said Roopenian. Though it has taken six years to recover, the market is catching up fast. At the end of last year asking rents were in the $60 and $70 per-square-foot range. Today asking rents for trophy buildings are in the $80 and $90 per square foot, said Roopenian.

"I think tenants can see where the market is going," said Roopenian. "The evidence of that is the deals we're actually writing. People see where rents are going. The evidence of that is we have (three deals) at or above $70s."
BSA on Beacon Hill

The Boston Society of Architects (BSA) made its annual pilgrimage to Beacon Hill on May 8. For the fifth year, the architects lobbied legislators to adopt "an act to establish a green building income and excise tax credit" to entice developers to build green, or environmentally sound, buildings. The BSA's members believe tax credits will help developers get beyond some of the barriers to building green -- namely money.

Up until this year Ken Fisher, a principal at design firm Gensler and chair of the committee on the environment at the BSA, acknowledged "tax credits are hard to approve in deficit years." However, this year could be the BSA's year since green building and green technology is becoming more politically relevant, said Fisher.

Michelle Hillman is the real estate reporter for the Boston Business Journal. She can be reached at mhillman@bizjournals.com.

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Originally Posted by The Globe

With prices soaring, a big tower goes on the block

By Thomas C. Palmer Jr., Globe Staff | June 6, 2007

The roaring commercial real estate market is getting too hard for property owners to resist.

Rose Associates Inc. and MetLife Real Estate Investments, the original developers and longtime owners of One Financial Center, are the latest owners moving to cash in on the furious escalation in prices for office buildings. Today, they are putting the prominent tower near South Station on the market, and industry specialists estimate they could draw bids as high as $900 million.

The 46-story tower goes on the market at a time when prices for prime Boston office properties are rising rapidly, doubling even in a few years, and some top-quality buildings are selling and reselling in a similarly short span.

"This is confirmation of what has been the case for three years, and that is the investment market for first-class trophy properties in Boston is insatiable," said David I. Begelfer, chief executive of the National Association of Industrial and Office Prop erties' Massachusetts chapter.

If One Financial Center, at about 1.1 million square feet, sells at about the same price per square foot as the similarly sized State Street Financial Center tower did late last year, it would bring more than $900 million -- among the most ever in the city. State Street Financial Center sold for about $870 a square foot, a record, according to Cushman & Wakefield of Massachusetts Inc., which is marketing One Financial.

The current high prices are fueled in part by a strong and improving market for office rents in Boston, a shortage of new space, and growing mounds of capital looking to buy in an investment category that continues to outperform traditional equities markets.

Total sales of Boston-area office properties skyrocketed from $1.6 billion in 2002 to more than $10 billion last year, according to Real Capital Analytics, which tracks commercial sales. Prominent examples include the John Hancock Tower and adjacent properties, which Beacon Capital Partners LLC bought in 2003 for about $910 million and sold in December 2006 for almost double that. The tower alone fetched about $1.3 billion.

John Calagna, public relations director in MetLife's New York office, said his company, a 50-50 partner with Rose, may cash out some of its interests in the building and still retain partial ownership in One Financial Center, a six-sided glass and steel structure on Summer Street. Bids are expected to be due in about 30 days.

"It's a terrific property, and we think this is the perfect time to be gauging interest in this marketplace," said Calagna. MetLife has offices in One Financial Center and plans to stay, he said.

Rents at Boston office towers in the Financial District, and especially for first-class spaces such as One Financial Center, are moving up fast, after several soft years.

Average rents for top-quality space in the Financial District peaked at about $70 per square foot in 2001, then plummeted over subsequent years, to less than $40 through 2004 and 2005 -- about what the rent was for one of the top tenants in One Financial Center when it opened more than 20 years ago.

But now, with many downtown buildings filling up after several years of having empty floors, average rents for premium space in the Financial District exceed $50 per square foot, according to the real estate firm Jones Lang LaSalle.

Rob Griffin, president of Cushman & Wakefield, said the property is expected to bring at least $800 a square foot, or about $850 million. He attributed the high anticipated price to a number of factors, including the arrival of many new property owners in town that are aggressively pushing higher rents, fewer choices for prospective tenants, and the completion of the Big Dig, which is laying a set of parks at the building's front door.

One Financial is "one of the truly elite Class A towers in the city," Griffin said. "It's one of five or six buildings that outperform the market in rents and occupancy. It's in an absolutely unbelievable location in the city, in terms of getting in and out."

The building, which is slightly shorter than One International Place, cost $100 million to build and opened in 1984, with 1,065,607 square feet. Today, it is nearly 100 percent leased.

Another Boston tower developed by Rose, 99 High St., was sold about two years ago -- for the third time in five years.

Even the most iconic and newest properties in Boston, like the Hancock Tower and State Street Financial Center (formerly called One Lincoln Street), have had multiple owners over a few years.

"It's a great time to sell," Begelfer said. "The opportunity to buy at the historic high point in the market and to still show a healthy return is pretty much assured."

Thomas C. Palmer Jr. can be reached at tpalmer@globe.com.
? Copyright 2007 Globe Newspaper Company.