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.
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.
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.
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.
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.
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.
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.