The 36-story One Lincoln office building was sold to its lender at a Friday foreclosure auction that illustrated the despair of Boston's office market.
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The auction took place at the corner of Kingston and Bedford streets in front of a closed exit to the 1.1M SF office tower. It was a particularly windy and chilly morning, and the auction drew roughly 40 onlookers — and no bidders.
After a legal notice was read, bidding began at $500M. With no takers, auctioneer Samantha Saperstein dropped the starting bid down to $200M.
“You got to start somewhere, folks. You're not going to get it for that much of a steal,” she told the crowd.
Even at that price, no takers emerged, though a $400M bid was submitted from one of the lenders on the property. Saperstein pushed for $450M, but no further bids presented themselves.
Fortis Property Group acquired the then-newly completed office tower in 2006 for $889M, meaning one of the more prominent office towers in the city's skyline sold for less than half that price.
Adrienne Walker, restructuring attorney for Troutman Pepper Locke LLP, presented the winning bid on behalf of her client, MSD Partners. The credit bid came after the auction was postponed by auction company Paul E. Saperstein Co. for unknown reasons Thursday.
One Lincoln was anchored for decades by State Street Corp., which displayed its logo atop the building. But just before the start of the pandemic, State Street announced that it planned to move its global headquarters to HYM Investment's then-under-construction One Congress.
The vacancy was a hit to the office building, coming at the beginning of a pandemic that saw office usage drop precipitously.
Things seemed to be improving for Fortis in 2022 when it landed HarbourVest as a tenant. The private equity firm signed a lease for 250K SF on the top 11 floors, as well as brandishing its name on the building.
The landlord was also able to secure a $1B refinancing deal with MSD Partners to repay existing debt and provide $200M in capital upgrades, including renovations of the lobby, food service space and amenities.
DivcoWest provided a senior mezzanine loan as part of the 2022 deal.
Yet even with the upgrades and new tenant, One Lincoln continued to struggle. Fortis was unable to lock down any other new tenants, leaving the building half empty. Another blow came late last year when WeWork reduced the 241K SF it occupied in the building.
Landlords have found it difficult to navigate the market and attract tenants amid rising vacancy. In the fourth quarter, downtown Boston vacancy stood at 18.1%, according to CBRE.
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