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August 9, 2011 


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Boston-based Intercontinental Real Estate Corp laid down $215M to purchase and renovate of a 770k SF Plainsboro, NJ data center into the new US HQ for Danish pharma firm Novo Nodisk.

We snapped Intercontinental CEO Peter Palandjian with a favored painting by Melanie Taylor Kent and a sculpture called The Entrepreneur by Jim Rennert. Peter says that the deal that closed last week for 800 Scudders Rd in Plainsboro (the largest NJ CRE transaction this year—not counting Snooki's last haircut) is a signal of commercial banks’ renewed confidence in the US CRE sector. Since ’07, he says, there have been few deals of this size. That the lenders, Sovereign Bank and Wells Fargo, are willing to put a large, construction loan directly onto their balance sheets shows that they see significant upside for this JV of Intercontinental with Montvale, NJ-based Ivy Equities, and NYC-based LCOR Corp.  

Intercontinental CFO/COO Paul Nasser tells us that lenders like the limited risk of Intercontinental’s latest venture: Novo Nordisk has agreed to lease 563k SF for 15 years as its new US HQ and has an option to take the entire building at any time. As Peter says, this deal has the appeal of value-add returns but the assurance of safe, core attributes since Novo Nordisk is a long-term, credit-worthy tenant. Also, since at least half of the subcontracts have been bought out, the project cost is set. LCOR, the construction manager, will start the gut renovation next month with completion scheduled for spring ’13. The JV team plans to strip the ’85 vintage former Merrill Lynch-cum-Blackrock data center to its skeletal frame then replace the façade, roof, interior, mechanical systems and be LEED certifiable.


At Intercontinental, Tom Taranto and Michael Keyes led the acquisition effort. Boston-based HHF’s NYC office brokered the sale. Intercontinental’s lead investor (in for $55M) is the Northeast Regional Council of Carpenters whose executive secretary-treasurer Michael Capelli said the deal will create 500 construction jobs and an investment that will strengthen his members’ pension and annuity portfolios. Also investing with Intercontinental are the NJ Laborers and NJ Operating Engineers. Together, the three unions will invest $100M. Novo Nordisk, which will relo from Princeton, was repped in the lease by Newmark Knight Frank’s Steven Tolkach.




ARC principals Arthur Cohen and Rob Quigley tell us that while "the meds" have been pretty flashy lately (with Vertex' new HQ, Biogen’s relo to Cambridge, and MGH opening its $500M building in September), "the eds" long have been an ARC and CRE industry mainstay. ARC’s many projects include the interior renovations now under way at Tufts Dental School that Rob leads. (Wait, would that be med or ed? Or both?) Two years ago, ARC completed Tufts Dental’s $55M, 96k SF vertical expansion. The firm also is designing a renovation/expansion of the boathouse for Phillips Academy in Andover and a $20M, 85k SF renovation/addition of the art center at Deerfield Academy.

Principal Philip Laird, here with colleagues Mark Dolny, Abraham Ahn, and Charles Hibbard, is leading the work on the $18M conversion, expansion, and renovation of the former Boston Archdiocese Chancery Building at 2121 Commonwealth Ave into 70k SF of offices for Boston College. Construction is slated for March completion. For Greenwich Country Day School, ARC has designed a new section of campus: an $8M, 21k SF theater complex that is to be completed in the fall and a new $26M, 70k SF upper school building finished a year ago. Philip also is lead principal for the Holland Hall project in Tulsa: a master plan, including a new fitness center and dining facility that is now in design.


Would you want to go back to ‘02? You’d be nine years younger; the Patriots won their first Super Bowl (with two more to come); the Red Sox drought continued, but their next championship was just two years away. Plus, the average metro apartment vacancy was 4.3%. But Reis analyst Brad Doremus says you don’t need to go back in time to see similar vacancies. During Q2 ‘11, the Boston area apartment vacancy rate dropped 20 bps to 4.4%, the lowest since ‘03 and just a smidgen above late ’02. The rate peaked at 6.5% (in both Q2 '09 and Q1 '10) and has been falling precipitously ever since, shedding 210 bps to mirror the national performance. The good times are back and Reis expects vacancies to fall into the low to mid 3's over the next several years.

Good times, good ideas. Please pass them along to Susan Diesenhouse, susan@bisnow.com.
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