The 2.7 million-square-foot South Station air rights development is expected to get airborne in 2020 after decades of attempts to build offices and housing above the Boston transportation landmark.
A development team led by Houston-based Hines received $870 million in construction financing from a British investor and acquired the 8-acre site from the Boston Planning & Development Agency for $35.35 million on Thursday.
The construction lender, CIFF Investments LLP, is an affiliate of TCI Fund Management, a $20 billion London-based hedge fund and activist shareholder on climate change issues.
A Hines spokeswoman confirmed a Boston Business Journal report that the development team completed its financing package and is set to begin construction next spring. The initial phase consists of the 678-foot-tall Pelli Clarke Pelli-designed tower containing 768,000 square feet of office space and 347,000 square feet of residential space. Subsequent phases would include a 473,000-square-foot hotel-condo building and a 552,000-square-foot office building. The 8.3-acre site is located to the rear of the 5-story South Station headhouse.
Hines announced in October it was adding Dutch pension fund investor APG Asset Management and New York-based Dune Real Estate Partners as financial partners. Previously, Hines had been partnering with Gemdale Properties and Investment Management, a Chinese real estate company.
TCI Fund has emerged as a major lender of non-syndicated loans for developments in New York, according to a 2018 report in The Real Deal, including a $1.2 billion loan for the 35 Hudson Yards tower.
The South Station tower would become the third major office development under construction simultaneously in Boston’s central business district.
Millennium Partners is constructing 750,000 square feet of office space on the lower floors of its Winthrop Center tower in the Financial District, scheduled for completion in 2022.
And HYM Investment Group’s One Congress office tower at Bulfinch Crossing scheduled for completion in late 2022 spans 1 million square feet, including 510,000 square feet leased to State Street Corp.
