$775M Loan Spurs Winthrop Center Construction Restart, Keeps Delivery Date On Track
Millennium Partners secured a loan for more than three-quarters of a billion dollars Tuesday, allowing the developer to restart construction on Winthrop Center in late September and keep its projected delivery date intact.
The $775M construction loan, first reported by the Boston Globe, puts the mixed-use tower project back on track after myriad problems that surfaced during the planning phase — chief among them, the initial 775-foot design’s potential interference with flights to and from Logan International Airport — resulted in design changes.
The now-691-foot, $1.3B development’s most recent setback was the coronavirus pandemic’s negative impact on the condominium market, which prompted Millennium Partners and architect Handel Architects in June to submit a proposal to remove the east tower’s residential portion from the design. The Boston Planning & Development Agency approved the downsized plans in July, the Globe reported.
Millennium Partners Managing Partner Richard Baumert said the developer and the lender, Cale Street Investments, got through the lending process extremely quickly before closing on the loan Tuesday.
“In our history, it’s like record time to get this financing put together within maybe 90, 120 days,” Baumert told Bisnow in a phone interview Thursday afternoon. “There was a real commitment to get going as quickly as we could so we could restart the work.”
“We are proud to partner with Millennium Partners Boston in support of the development of Winthrop Center,” Cale Street founder Ed Siskind said in a statement. “For over 25 years, Millennium Partners has had a proven track record for delivering luxury mixed use properties. We believe Winthrop Center will be a market leader in sustainability as the largest Passive House office building in the world.”
Despite a lack of work between Mayor Marty Walsh’s mid-March construction moratorium and when Winthrop Center construction resumed in late September, when Baumert said Millennium felt it had the financing buttoned up, the tower’s late 2022 delivery date is unchanged.
“With the reduction of that residential portion when we went back [and] made that change, that saved us some time,” Baumert said.
It also made the building more affordable and affected Millennium Partners’ financial agreement with the city. In approving the reduction of living space and a plan to eschew condos in favor of rental units, the BPDA also agreed to a $26M reduction in funds Millennium promised to the city for an affordable housing high-rise in Chinatown, the Globe reported, and the remaining $22M the developer will pay the city could be spread over the next 10 years.
But Baumert said things remain fluid. Depending on the market closer to delivery, the plan may revert to selling the project’s 572K SF of residential space as condos rather than renting them as apartments.
“Our hope would be, and has always been, to sell, and if we are successful or the environment is such that it would allow us to sell, that payment [to the city] would happen sooner than 10 years,” he said.
Baumert said the city has been supportive of Millennium’s flexibility on that front.
Although no office tenants have signed on to take some of Winthrop Center’s 812K SF of office space, Baumert said Millennium was in deep talks prior to the pandemic with potential tenants and that they continue today.
He touted the tower’s health and sustainability focus, saying it has significant sunlight exposure, fresh air and will be WELL- and LEED-certified. It is expected to use 65% less energy than the Boston average, Baumert said, and provide 30% to 50% more fresh air than comparable buildings.