Boston Properties Buys In to Colorado Center

New York-based mega investment firm Blackstone Group is selling its stake in a Santa Monica office complex to Boston Properties for more than $500 million, marking the real estate investment trust's first purchase in southern California. According to a report from The Real Deal, it is the priciest single-property commercial sale to go down in L.A. County this year. The Teachers Insurance and Annuity Association (TIAA), a financial services organization, still controls the other 50% interest in the property.

Blackstone Group is selling the 50% stake in the Colorado Center that it acquired in 2007 from Equity Office Properties Trust as part of a $39 billion buyout of the company, the Los Angeles Business Journal reported. Equity Office bought the complex for $443.6 million in 2004 from Tishman Speyer Properties through a joint venture with TIAA-CREF, leaving Equity's net share of the purchase price at approximately $221.8 million. Prior to that, Tishman Speyer acquired the office property for about $353 million in 2000 from Maguire Partners.

"After a decade-plus of Boston Properties angling for a way to buy into the westside L.A. office lifestyle, it seems that the company has finally been able to plant its flag near the Santa Monica beaches," Alexander Goldfarb, an analyst with Sandler O'Neill & Partners LP, wrote in a research note after the Real Deal report. "Boston Properties' fortress balance sheet makes it well-suited for these sorts of purchases."

Colorado Center, formerly known as the Yahoo Center and MGM Plaza, is a six building, 15-acre property in the Silicon Beach area of Santa Monica with over a million square feet of office space. Originally built in the 1980s, the property has undergone several renovations, including a major overhaul prior to Yahoo's arrival by then-owner Tishman Speyer. The property was roughly 63% leased at the time of sale, with major tenants including Hulu, Yahoo! Inc., Riot Games Inc. and eHarmony.

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Boston Properties Grabs Santa Clara Office for $78M

In the company's public release of Q1 2016 results, Boston Properties disclosed the acquisition of 3625-35 Peterson Way in Santa Clara, California for approximately $78 million in cash. Boston Properties purchased the 15-acre site from Eaton Vance Management, a wholly owned subsidiary of Eaton Vance Corp., which paid $53 million (or $243 per square foot) for the property in March of 2008. The deal was facilitated by Eastdil Secured, but terms were not disclosed.

Originally built in 1979, the 218,400-square-foot building flex building has office, laboratory and warehouse space located 10 minutes from the Norman Y. Mineta San Jose International Airport. The property was 100% leased at the time of sale to Spectra-Physics, a manufacturer of semiconductor-based lasers and laser optics (and a subsidiary of Newport Corp.) that moved its headquarters to Peterson Way in 2009; the lease does not expire until March 2021. Boston Properties indicated that after the lease is up, it plans to develop the site into a Class A office campus containing an aggregate of approximately 632,000 net rentable square feet. The projected cost for the future development is around $700 per square foot, and the expected initial return once the project is finished is 7%.

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Columbia Sells 100 East Pratt for $187M

Columbia Property Trust, a real estate investment trust that owns and operates Class-A office buildings concentrated in CBD locations, announced that it has completed the sale of 100 East Pratt Street in Baltimore, Maryland for $187 million. Columbia sold the iconic 653,000 square-foot office building to Vision Properties, an east coast real estate firm. The HFF investment sales team represented Columbia Property Trust in the transaction; Vision Properties' representation and full terms of the deal were not disclosed. Columbia said in a press release that it would use the proceeds of the sale to repay a $119 million short-term bridge loan and borrowings on its unsecured credit facility. The building was previously sold by Boston Properties in 2005 to Wells Real Estate for $207.5 million, and was added to the Wells REIT II portfolio, which later became Columbia Property Trust.

"This week's sale of 100 East Pratt, which was our only asset in Baltimore, represents another milestone in our ongoing transformation of Columbia Property Trust's portfolio into one that is primarily focused on the acquisition, leasing and operation of top quality office properties in the nation's high-barrier markets," said Nelson Mills, president and chief executive officer of Columbia Property Trust. "Through this sale, we achieved pricing well within our target range for the property, which reflects its overall quality and solid performance during our years of ownership. More importantly, we have now successfully sold 48 non-core properties totaling $2.3 billion in proceeds since 2011, while simultaneously investing $2 billion in prime office properties located in New York, San Francisco, Washington and Boston."

Located at the intersection of Pratt and Light Streets, 100 East Pratt Street is the long-time home of investment management firm T. Rowe Price, which occupies 65% of the building. the 28-story tower features a 2-story lobby, ground-level retail, fitness and conference center and an abutting 8-level parking structure with 940 parking spaces and direct access into the building. The building originally began construction in 1973 by Emery Roth & Sons, then completed and developed in 1992 by Skidmore, Owings & Merrill. The property was 98.5% leased as of December, with additional key tenants including PriceWaterHouseCoopers, Merrill Lynch and Tydings & Rosenberg.

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Boston Properties' Back Bay MU Project

Boston Properties, Inc., an REIT that focuses primarily on the Boston, New York City, Washington, D.C., and San Francisco markets, and Whitehall Street Real Estate Limited Partnership IX, an affiliate of
Goldman, Sachs & Co., announced that they have submitted a letter of intent with Prudential Insurance Company of America to acquire the commercial property and development rights associated with the Prudential Center located in Boston's "Back Bay" office and residential neighborhood. MassDOT approved long-term leases of the four air and ground parcels at 145 and 165 Dartmouth St. to Boston Properties in December 2014; Boston Properties and Whitehall are seeking approval for development rights that would allow approximately 1.75 million gross square feet of new commercial construction, with two office buildings totaling 1.72 million net rentable square feet, a 477,000 net-rentable-square-foot retail complex and a parking garage with 2,700 spaces.

The letter is, of course, non-binding and doesn't ensure that an agreement will be reached to move forward with the companies' plans, but Prudential officials noted in a press release that the decision to move into exclusive negotiations now with Boston Properties and Whitehall was made for "strategic reasons." Brian Murphy, Managing Director for Prudential general account real estate investments, said, "From the beginning of this marketing process, we have been interested in alternatives to a straight cash sale. We believe in this property's potential for favorable investment returns well into the future, and we want to participate by retaining a stake -- directly, indirectly or both." David Raszmann, Prudential Vice President in charge of the property, added, "Prudential Center is indisputably the hub of Boston's Back Bay, and is one of America's best-recognized landmarks. Neither we, nor generations of Bostonians want that to be disrupted. The name Prudential Center will remain as part of the final deal."

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JV Developing New Brooklyn Navy Yard Workspace

Boston Properties, Inc., Rudin Development and WeWork, in conjunction with the Brooklyn Navy Yard Development Corporation, announced this week that, under a joint initiative, the companies will be developing a new 675,000-square-foot building at the Brooklyn Navy Yard to cater to the rapidly emerging technology and creative industries in Brooklyn. The new building, dubbed Dock 72 at The Brooklyn Navy Yard, is a $380 million project scheduled to begin in late 2015 with an anticipated tenant delivery in late 2017. The building design created by S9 Architecture, an affiliate of Perkins Eastman, is designed to drive innovation and collaboration between tenants. According to the agreement between the development team and BNYDC, all tenants in the building will pay a living wage to their employees, making it the first new development in Brooklyn with such a commitment.

"From start-ups to expanding firms, this new workspace is going to put thousands of New Yorkers to work and help launch the next great wave of home-grown innovation. We are growing the Navy Yard's capacity for manufacturing, tech and the maker economy faster than any time in its modern history. We are thrilled to work with Boston Properties, Rudin Development and WeWork to bring this new space online and keep building on the Navy Yard's incredible success story," said NYC Deputy Mayor for Housing and Economic Development Alicia Glen.

"The tenants that occupy this new building will contribute to the modern industrial ecosystem of the Yard—where technology, design and manufacturing converge. The shared work space will nurture hundreds of small businesses and spark the next generation of large-scale employers in the Yard," added BNYDC President and CEO David Ehrenberg. "Furthermore, this type of large, private-sector investment signals a watershed moment in the growth of the Brooklyn Navy Yard. Thanks to this vote of confidence from respected investors and developers and this partnership with WeWork, BNYDC will be able to attract additional top creative and industrial firms that will create thousands of jobs for local residents."

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Real Estate Investors Pushing New Construction

In a new article from the Wall Street Journal titled For Real-Estate Investors, It's Out With the Old, Eliot Brown explores how the global hunt for yield is rippling through the U.S. property market. With foreign investors and pension funds push up prices for top-quality, low-vacancy office buildings, several publicly traded real-estate investment trusts such as Boston Properties are piling into new projects offering better growth potential, even if it means more risk. An excerpt follows:

"Most of the REITs are pivoting to development or heavy redevelopment as an investment strategy," said Jed Reagan, an analyst at Green Street Advisors Inc. who follows office landlords. "There's so much aggressive capital out there that's looking for a home," he said.

Boston Properties' latest deal, for the buildings at 601 Lexington Ave. in Manhattan and 100 Federal St. and Atlantic Wharf in Boston, puts the company on track for more than $2 billion in property sales this year, up from $1.3 billion in 2013. At the same time, it had $3.5 billion of projects under development in the second quarter, including a San Francisco site that is to be the second-tallest tower west of the Mississippi River.

A year earlier the company developed $2.5 billion of projects, its highest level in at least a decade.

"We're certainly more bullish on development than buying buildings," Mr. Zuckerman said in an interview in his Midtown Manhattan office.

"Older buildings are trading at higher prices per square foot than where we can build," added Owen Thomas, the former Morgan Stanley executive who became Boston Properties' chief executive last year.

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Hines, Boston Properties Form JV for Transbay Tower Project

The San Francisco Planning Commission gave final approval this month for the Transbay Tower, a, 1070-foot skyscraper slated to become not only the highest point on the San Francisco skyline, but the tallest building on the entire West Coast, according to a Huffington Post article. Hines and Boston Properties have entered a 50/50 joint venture on the land for Transbay Tower; a spokeswoman for Hines confirms that it's the first JV between the two owner/developers, who will pay approximately $190 million to acquire the land from the Transbay Joint Powers Authority.

The proposed Transbay Tower at First and Mission streets will be part of a 145-acre Transit Center District that will include commercial high-rises, residential towers, hotels and retail space, all wrapped around a planned Transit Center that will be the hub for local and regional bus lines, as well as the underground terminus for the proposed Caltrain extension and the statewide high-speed rail line. Designed by Pelli Clarke Pelli Architects, the 1.4 million-square-foot, 61-story tower should begin construction as early as next summer with building delivery in late 2015.

"We think the tower will be a beautiful addition to San Francisco's beloved skyline as well as an extremely desirable and sustainable workplace next to one of the state's busiest transit hubs," Hines chairman Gerald D. Hines said in a statement.

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100 Federal Street in Boston Sold for $615M

Boston Properties Inc. announced this week that it had completed the acquisition of 100 Federal Street in Boston, MA for $615 million from an affiliate of Bank of America, N.A. Despite the sale, according to a Boston Business Journal article, the bank's Boston headquarters will remain at 100 Federal. The lender has signed a long-term lease for 787,000 square feet of space.

100 Federal Street is a 37-story, 1,305,000 square foot Class A office tower located in the heart of Boston's Financial District and was reportedly 93% leased at the time of sale. Situated on Federal Street and bounded by Franklin, Congress and Matthews Streets, 100 Federal Street occupies an entire two-acre city block. Designed by Campbell, Aldrich & Nulty, the tower features an expansive window line that affords breathtaking panoramic views of the Financial District, the waterfront and Boston Harbor, the Charles River and the Cambridge skyline.

For more news and information visit Blumberg Capital Partners.

Proposed New Building in Cambridge for Google

A letter dated February 27 to the City Council of Cambridge outlines a proposed connector building that would add 25,000 square feet of office space to the Cambridge Center, increasing the space currently leased to Google (now 300,000 square feet). Boston Properties, Cambridge Center owner, has released a full proposal for the new construction on behalf of its tenant.

"Google ... has outgrown its existing space and is looking to create an urban campus configured in a manner to facilitate its work processes, enhance its unique culture and help attract the best candidates for its workforce," Michael Cantalupa, Boston Properties' senior vice president, wrote in a letter to Cambridge City Manager Robert Healy. "The ability to expand ... is an essential component of Google's campus plan, without which Google has indicated that it will have to look elsewhere to meet its space needs ... It is our hope that the growth of Google in Cambridge will enable the city to realize economic and community benefits for many years to come."

According to a Boston Business Journal article, construction of the new space would require the city's approval to modify a pair of existing open space covenants that would reduce green space by 18,147 square feet — about 25 percent — from a park atop the East Garage. But Boston Properties said it would replace the lost open space with a new, 47,000 square foot urban park on land owned by the Cambridge Redevelopment Authority at the corner of Binney and Galileo Galilee Way.

"I'm very excited about Google wanting to expand in Cambridge," said City Councilor Leland Cheung. "It underscores that Cambridge is a great place to do business especially if you're in the innovation economy."

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Two Grand Central Tower Sold for $401M

Two Grand Central Tower in New York, which went to market in June of this year expecting a sale price of $370 million, sold this month for $401 million according to a National Real Estate Investor article. The tower was sold by a joint venture between Boston Properties, Goldman Sachs and Meraas Capital, which is controlled by Dubai's ruler, Sheikh Mohammed bin Rashid. The unnamed buyer assumed $176.6 million of mortgage indebtedness according to the REIT.

The 667,000-square-foot building at 140 E. 45th St. was developed in 1982 and later sold by Harry Macklowe. The joint venture originally purchased the property in 2008 from affiliates of Macklowe Properties as part of a $705 million deal that also included 540 Madison Avenue in New York City.

During an Earnings Call, Boston Properties' Douglas T. Linde commented on the sale of the property saying:

"The office mark-to-market is still getting stronger, about a positive $1.41 per square foot. It was nice to be able to announce today in our supplemental aspect that we actually closed our sale of Two Grand Central. I would say I was a little gun-shy, given what our experience was with the New Jersey sale or lack of sales for the last couple of quarters. But we sold the building for $400 million, $617,000 a square foot. And if you look at the supplemental information for the third quarter on an annualized basis, the income is $13.9 million. But the building, again, is only 74% leased. So you can do the math and figure out what the conical cap rate is if you want to think about things in that way.

The sale of this asset was really always a possibility ever since the initial acquisition. To be truthful, and I think a lot of you acknowledged this and commented to us, the building has a very different market position and leasing profile than the other portions of our New York City portfolio. And was distinct enough from that portfolio, that we just came to the conclusion that there was very little synergy to owning the building. And so we sold it when the time was right."

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$1B Midtown Office Tower to Resume Construction

After signing a new lease with the law firm of Morrison & Foerster LLP, Boston Properties announced this week that construction on its 39-story office tower in New York City would resume as early as this fall. Morrison & Foerster will lease roughly 180,000 square feet at the tower at 250 West 55th Street and expects to move into the completed building in the spring of 2014.

After breaking ground in late 2007, Boston Properties announced it would halt construction on the tower in early 2009 after the completion of excavation and foundations and construction of the building to grade level according to a CoStar report. The 1,000,000 square foot, LEED Gold pre-certified office building is expected to cost $1.05 billion once the project is complete. Morrison & Foerster LLP was represented by Paul Myers, John Maher and Tom Shirocky of CBRE, and Boston Properties was represented by John Powers and Peter Turchin, also of CBRE.

For more news and information visit Blumberg Capital Partners.

Boston's John Hancock Tower Sold for $930M

Boston Properties Inc. announced today that it would purchase the John Hancock Tower and Garage in Boston in a deal valued at $930 million according to the Associated Press. The purchase price reportedly consists of $289.5 million of cash plus the assumption of roughly $640.5 million in debt. The debt being assumed from the seller, a joint venture between an affiliate of Normandy Real Estate Partners and an affiliate of Five Mile Capital Partners, is a securitized senior mortgage loan that bears interest at a fixed rate of 5.68% per annum and matures in January 2017.

"The bidding was as fierce as anything I've ever handled during my 30 years in this business," said Robert Griffin, who brokered the sale for Cushman & Wakefield, a real estate services firm.

The John Hancock Tower is an iconic 62-story, approximately 1,700,000 rentable square foot office tower located in the heart of Boston's Back Bay neighborhood and is New England's tallest building. The garage is an eight-level, 2,013 space parking facility. As New England's tallest building, the John Hancock Tower features a 360-degree panoramic view of the Back Bay, Charles River, Cambridge, the Public Gardens, Boston Harbor and Financial District.

For more news and information visit Blumberg Capital Partners.

Bay Colony Corporate Center Sold for $185M

Lender Prudential Financial has entered into an agreement to sell Bay Colony Corporate Center in Waltham, MA for an aggregate purchase price of approximately $185 million to Boston Properties according to the Boston Herald. The purchase price consists of approximately $41.1 million of cash and the assumption of approximately $143.9 million of indebtedness. Prudential is selling the trophy property after seizing the site from former owner Eastern Real Estate last year. The closing is scheduled to occur in the fourth quarter of 2010 and is subject to customary closing conditions.

Bay Colony Corporate Center is a world-class office park located on 58 acres of forested land just minutes to downtown Boston. The four-building office park has approximately 1,000,000 square feet of Class A office space constructed between 1985 and 1998, with tenants including Cato BioVentures, Massachusetts Life Sciences Center, and Comerica Bank.

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GSA Signs 523,500 SF DIA Lease in Metro DC

Cassidy Turley announced that the U.S. General Services Administration (GSA) has awarded a 523,482 square foot lease for the Defense Intelligence Agency (DIA) to occupy Patriots Park in Reston, Virginia just outside of DC. Situated in two towers located at 12310 Sunrise Valley Drive, a brief drive out Interstate 66 from DC proper, DIA will enter into a 20-year lease at the property located near the Reston Town Center. The complex is currently undergoing a redevelopment by Boston Properties to meet the Department of Defense’s anti-terrorism/force protections standards. The pricing of the deal was not disclosed.

"Patriots Park is the logical choice for the DIA’s new facility," said Darian LeBlanc, senior managing director of government services for Cassidy Turley, which represented the GSA in the deal. "This selection allows them to consolidate multiple locations into a highly secure campus environment, central to all of Reston’s fantastic amenities and Metro’s Silver Line." DIA is headquartered at the Pentagon in Washington, D.C., with major operational activities at the Defense Intelligence Analysis Center (DIAC), Washington, D.C., the National Center for Medical Intelligence (NCMI), Frederick, Maryland, and the Missile and Space Intelligence Center (MSIC), Huntsville, Alabama.

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