H.N. Gorin reportedly has agreed to purchase the 92,000-square-foot office building at 955 Massachusetts Ave. in Cambridge from Paradigm Properties and the Carlyle Group for about $250 per square foot.
Chalk another one up for the locals.
As Hub-based New Boston Fund proceeds with its planned purchase of the 116 Huntington Ave. office building in Boston’s Back Bay district, another homegrown real estate operation has committed to buying 955 Massachusetts Ave. in Cambridge. “Yes, we do have it under agreement,” H.N. Gorin principal Rosalind Gorin confirmed last week of her intention to purchase the 92,000-square-foot office building from a partnership of Paradigm Properties and the Carlyle Group.
While details about the sale were not provided, sources said Gorin will spend an estimated $23 million for the prominent building, which is located between Central and Harvard squares and currently sports an occupancy rate of 97 percent. That price would equate to a healthy $250 per square foot.
The sale comes in the midst of a fluctuating investment market, with interest in Boston-area office properties still considered solid, but deals becoming increasingly harder to close. Yet even as some negotiations have struggled, most notably the collapse of a deal to sell Boston’s One Beacon St., other opportunities continue to emerge. Cushman & Wakefield was recently hired to sell Boston’s 101 Arch St., for example, while sources said last week that Lend Lease Real Estate Investments is placing its 745 Atlantic Ave. office building in Boston on the trading block.
“It is definitely on the market,” insisted one broker of 745 Atlantic Ave., although efforts to confirm that by press deadline were unsuccessful. Sources said Lend Lease has retained Holliday Fenoglio Fowler as broker to sell the building, which reportedly is being targeted to sell in the $60 million range.
Albeit a hefty price, some brokers said a solid tenant roster at 745 Atlantic Ave. should help garner investor attention, with companies such as Iron Mountain, Key Bank and the Brown Rudnick law firm among the occupants of the 11-story, 170,000-square-foot building. According to industry observers, the hardest sales to put together in the current environment have been those with questionable cash flow over the near term.
“The real issue has been underwriting for the next 12 to 18 months,” said Trammell Crow Co. investment chief James McCaffrey, whose group is brokering both the 116 Huntington Ave. and 955 Massachusetts Ave. deal and another pending at 116 Huntington Ave. in Boston, with New Boston Fund reportedly acquiring that property.
While stressing that the bid/ask gap which has dominated the 2002 investment cycle is beginning to narrow, McCaffrey said investors are somewhat unnerved if a property is facing short-term rollover of its rent roster. “Lenders with capital sources are being very conservative in [projecting] rent growth, and the sellers are trying to be more optimistic,” McCaffrey said.
‘Tough’ Deals
While he would not discuss specifics involving the H.N. Gorin or New Boston Fund deals, McCaffrey said he is encouraged by the overall resiliency of the local investment climate. For the most part, McCaffrey said, opportunities are attracting a solid range of funding sources, both public and private, as well as domestic and overseas. “There is still a lot of capital trying to find its way into real estate right now,” said McCaffrey. “If you have good-quality product with minimal rent rollover, there is a lot of debt and equity out there to get sales closed.”
Even with Boston sporting such international cache, however, local investment groups have managed to win their share of competitions in 2002, as evidenced earlier this year by the purchase of the Lafayette Corporate Center in Boston by the Abbey Group, best known for its development of Landmark Center in Boston’s Fenway district. Although Lafayette was expected to garner attention from major investment groups, Abbey ultimately was able to consummate the $133 million deal.
New Boston Fund, meanwhile, has continued to be an active player in its hometown, having earlier this year acquired the Rivertech Office Park in Billerica, a $23 million deal also brokered by Trammell Crow. Other local properties controlled by the privately funded investment group include One Alewife Center and 10 Fawcett St. in Cambridge and Five Burlington Woods in Burlington, while New Boston Fund also has holdings in such regions as Connecticut, Illinois, Indiana and Washington, D.C. Sources estimate New Boston Fund will pay between $70 million and $72 million for 116 Huntington Ave., a 265,000-square-foot building that opened in the Hub in 1991.
Rosalind Gorin, meanwhile, has scooped up her share of local assets in the past few years, including 55 Summer St. and One Bowdoin Square in Boston. Gorin also owns 101 Merrimac St. in Boston’s North Station district.
As for One Beacon St., sources said the property has been temporarily taken off the market, but it is expected to be offered up again soon to potential buyers. Cushman & Wakefield New England President Robert E. Griffin Jr. acknowledged that a commitment by Broadway Partners LLC and Lend Lease is no longer in play, but added he is still bullish on that tower changing hands, as well as the general health of the Boston investment market. The 101 Arch St. property, for example, drew 25 bidders, said Griffin, although that field has now been narrowed to a handful of suitors.
“Every deal is tough to get over the goal line right now, but we are getting things through,” Griffin said, adding, “People still believe in Boston long-term, and they want to be here.”
