Investors Nearly Match 2007 Peak for Office Sales
Investors--especially foreign ones--turned in a record performance, breaking the $1k/SF barrier here for the first time. In total, they spent nearly $9.9B throughout the metro area, a 58% jump over 2013 and closing in on the $11B of the '07 peak. Our friends at Colliers and RCA helped us compile this list.
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Vertex Complex, 50 Northern Ave
In May, Senior Housing Properties Trust paid The Fallon Co $1.1B for the 1.1M SF two-building office/lab complex on Fan Pier; a 6.5% cap rate. The fully occupied complex built in 2013 overlooking Boston Harbor has been a game changer for the Seaport District. Vertex has brought in 2,000 more workers a day to firmly establish the Seaport as a new Boston neighborhood that’s now on the radar of global investors.
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One Memorial Dr
Cambridge, once known for left wing politics and long-haired academics, is now recognized for having the most valuable office asset inch-by-inch in the region. Oxford Properties Group of Ontario paid Blackstone Group $1,148/SF ($405M) for the 352k SF, 17-story office on the banks of the Charles that’s 98% occupied and includes a long term Microsoft lease.
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100 Federal St
Sovereign wealth investor Norges Bank purchased from Boston Properties a 45% stake in this 37-story tower; analysts' estimates valued the '70s era building at close to $995M. Norway’s central bank liked the idea of getting a 1.3M SF “deep core,” Class-A property in Boston's supply-constrained market that’s 91% occupied. The tower last sold for $615M in 2012; a nice gain for Boston Properties. It now has more to spend on the billions in new properties it’s developing in North Station and Back Bay.
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Atlantic Wharf
In October, Boston Properties sold a 45% stake in Atlantic Wharf (270-286 Congress St) to Norges as part of a three-building, $4B deal that also included 100 Federal St and one Manhattan asset. Analysts estimate that the deal for Atlantic Wharf, which includes a section originally constructed in 1893, valued it for nearly $600M. What’s eye-popping about the trade—and few 19th century structures can make the claim—is that the price represents a 3.9% cap rate. Norges is likely planning on a long-term hold.
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225 Franklin
Oxford and JV partner JP Morgan paid Blackstone $590M for this 925k SF, 1966 tower with financing from Prudential. 2014 was the year Blackstone capitalized on the portfolio it purchased from EOP in ’07; it sold seven of the top 13 assets that traded. A good year to sell due to extremely intense capital market interest in Boston, it was also a good year to buy given the lack of new product and rising rents.
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One Beacon St
In July, MetLife in a JV with Norges paid Beacon Capital Partners and partner Allianz $562M ($553/SF) for the 1M SF 1973 high-rise that’s 85% occupied. MetLife and Norges also own One Financial Center; District Center (formerly the Thurman Arnold Building) in DC; and 425 Market St in San Francisco. While US investors competed for One Beacon and the other top assets, the Norwegians and Canadians could afford to pay more.