News
Merrigan To Boston: You're Tops
November 15, 2011
| Ask Taurus Investment President and CEO Peter Merrigan what he thinks of Boston after closing a $226.5M sale, and he's all smiles. (You'd think he just sent a child off to college.) |
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| We snapped him last week moderating a REFA meeting about financing CRE investments. ?We did well,? he says of Taurus' and JV partner UrbanMeritage's recent sale of 28 properties aroundNewbury Street to Jamestown Properties. He was also upbeat about the Boston CRE market (it's among the top five in the US) because of its job growth, diverse economy, and high barriers to entry. But fear about the world?s precarious economic condition means there's a ?feeding frenzy? among investors for the best assets. That's why core assets, like the Back Bay portfolio Taurus sold two weeks ago, are selling ?at record prices.? As for theworld as a whole? ?It's a mess,? he says. |
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| Fidelity Management's Natalie Herald (left), who addressed mezz lending, says she wishes her group could do more deals in Boston. But they're a niche investor, and Natalie says there aren'tmany niche opportunities here. Her six-person shop seeks to place $5M to $15M mezz requests structured co-terminus with the senior debt, usually for a relatively short term. Over the past year, the most promising opportunities have been in new developments, she says. Peter adds that the de-leveragingaccompanying the Great Recession isn't over. And sovereign debt problems are thorny and dangerous to the overall economy. |
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| Wistar Wood, an AEW director who sources, negotiates, and underwrites new investments, says that these days, defined benefit and other retirement plans are starved for ROI. Whileinvestment advisers benefit from this trend, they're alsocompeting fiercely for these clients. Winning usually comes down to relationships and track record. He says the time to raise the average real estate fund is 15 to 18 months, compared to nine months a few years ago. Now, investors want safety and Wistar?s approach is to buy Class-A and B+ properties in A locations, likeOne Brigham Circle adjacent to the LMA, which AEW purchased for $97M in March '10. |
