CrossPoint office complex in Lowell, reportedly trading hands for $156 million, was sold at foreclosure for $525,000 less than eight years ago.
In a sale that would offer a boost to the Boston area’s struggling commercial real estate market, a New Jersey company is acquiring the CrossPoint office complex in Lowell, industry sources told Banker & Tradesman last week. Sources placed the transaction at $156 million.
“It is under agreement,” insisted one source close to the negotiations, claiming Advance Realty Group has signed a letter of intent to purchase the 1.2 million-square-foot property. Sources said the firm beat out several other bidders for CrossPoint, a three-building complex that has undergone dramatic swings in the past decade. Barely eight years ago, in the wake of the collapse of Wang Computers, the former Wang Towers was sold at foreclosure for a mere $525,000, or about 35 cents per square foot. If the $156 million number is attained, it would average $130 per square foot.
Advance supposedly is entering a due diligence process, with an aim of wrapping up the sale before year’s end. Some observers did express surprise at the acquisition price, with one terming it “a bit high” in light of significant vacancies in the overall suburban office market and in the Lowell/Chelmsford area in particular. “That’s going to be a tough one to get over the goal line,” said one industry broker. On the flip side, another broker claimed CrossPoint’s quality and dominance in the market north of Boston makes it a worthwhile investment. “There were an awful lot of people going after it,” noted the source.
Ironically, the partnership that led the way in the initial acquisition of CrossPoint is placing another asset of theirs in downtown Boston up for sale, with Insight Partners retaining Spaulding & Slye Colliers to market 88 Kingston St. The 37,000-square-foot property joins a growing list of Hub buildings on the trading block, including the recent additions of 313 and 330 Congress St.
As for the CrossPoint sale, calls to Advance Realty principal Gary J. Sopko were not returned by Banker & Tradesman’s press deadline. Cushman & Wakefield investment chief Robert E. Griffin Jr. declined comment on the matter, except to acknowledge there was “great interest” in the property by the investment community, albeit entirely from domestic sources. As has typically been the case in the Massachusetts office market, overseas money declined to wander into the suburbs chasing the CrossPoint opportunity, although such funds continue to home in on the downtown Boston office market.
In a deal Banker & Tradesman reported last month, for example, an Australian real estate fund has agreed to purchase 50 Milk St. in Boston’s Financial District for an amazing $400 per square foot, while Lend Lease Real Estate Investments is said to be hot on the trail of One Beacon St., the 41-story office tower adjacent to Government Center. Lend Lease is reportedly teaming up with another partner to acquire the 32-year-old Beacon Street tower.
Chasing Deals
Cushman & Wakefield is also marketing One Beacon St., forcing Griffin to decline comment on that sale as well. But the president of the New England division of Cushman & Wakefield did dispute views from some industry observers that the purchase price of 50 Milk St. is overaggressive in the current environment.
“That deal is great,” said Griffin, explaining it offers the buyers the solid cash flow and long-term stability being sought by investors in all markets at present. Currently owned by a Florida pension fund advised by Lend Lease, 50 Milk St. is secured by a long-term lease to the anchor tenant, Brown Brothers Harriman, a well-heeled investment company.
“That’s exactly the kind of deal everybody is chasing right now,” said Griffin. The Australian fund, known as Challenger, would be making its initial foray into the Boston market.
Advance Realty Group has been in the Bay State for some time, with its first major purchase occurring in late 2000 when it acquired the Westboro and Southboro Executive Parks in Westborough and Southborough, respectively. In making that acquisition, Advance Realty officials stressed the company was targeting other Bay State properties as well. It apparently has successfully landed a large one in the CrossPoint opportunity.
Advance paid an estimated $126 per square foot for the Westboro and Southboro Executive Parks, which it purchased from the State Retirement System of Ohio. Westboro features three buildings and 216,000 square feet of space, while Southboro has three buildings and 70,000 square feet in total.
Advance Realty also owns office properties in Andover and South Portland, Maine. Founded in 1979 by Peter J. Cocoziello, the firm is headquartered in Bedminster, N.J., and has holdings throughout the Northeast, primarily in New Jersey, Maryland, Virginia and Washington, D.C. Along with acquisitions, the firm also provides development and property management services.
Advance would be buying CrossPoint from a joint venture between Blackstone Realty Advisors and Yale Properties USA. That partnership acquired the complex in 1998 for $101 million after a group of local real estate investors scooped up the development in 1994. Joined by a New York investment outfit, brothers Christopher and Brian Kelly teamed up Louis Alvarado and Daniel Doherty to make the bargain-basement acquisition on the cusp of the commercial real estate market’s rebound. The group put an estimated $20 million into upgrading and leasing the building before selling it to the current owners.
On the Boston activity, Insight principal Christopher Kelly did not return a phone call about the Kingston Street sale, but Spaulding & Slye principal Michael G. Smith acknowledged that his real estate investment team will put the building on the market beginning this week. The Massachusetts Commission for the Blind occupies the entire property, but will be departing in November. While that vacancy might be disconcerting to some, Smith maintained it provides a new owner with greater flexibility.
“There are a lot of ways you can go,” Smith said of the building, which is currently zoned to allow for a variety of uses, including office, residential and hotel. Acquired by Insight in 1999 for $4.7 million, Smith said there is no asking price for the building due to the range of potential redevelopment plays. Among the attributes, Smith said, are an improving location from the anticipated completion of the adjacent Big Dig project, as well as the opening next door of One Lincoln St., a brand new office tower slated for completion in 2003. In addition, Insight Partners has negotiated a long-term lease of 10 parking spaces in the One Lincoln St. garage.
A few blocks away in Boston’s Fort Point Channel area, EdwardsDay has put 313 and 330 Congress St. up for sale, according to industry sources. Efforts to contact the Atlanta-based owners were unsuccessful, but several sources agreed that the buildings are being marketed for sale. EdwardsDay bought the two buildings three years ago in its incarnation as Lambert Smith & Hampton in a portfolio purchase involving two other buildings.
