The New Boston Fund continues to test a nascent investment sales rebound, following up the $96.8 million sale of Boston’s One Brigham Circle by putting a Westwood property on the market.
Eastdil Secured is marketing 80 Wilson Way, a 116,000-square-foot industrial flex property, on behalf of New Boston. New Boston paid $10 million for the property in 2003.
“We’re always looking at our portfolio, at opportunities to add value and create returns,” said Jim Kelleher, The New Boston Fund’s chief investment officer. “When it makes sense, if we believe there’s strong demand, we will bring an asset to the market.”
The 80 Wilson Way asset is an investment in the firm’s Fund V, the same 10-year, closed-end fund that produced One Brigham Circle. Kelleher said that Fund V is beginning to wind down.
“It’s time to start looking to sell assets that are well-positioned to sell,” he said.
Tight credit, falling rental streams, uncertain buyers and unmotivated sellers have combined to depress the commercial real estate sales market. Activity has picked up from the anemic levels of early 2009, but sales volume remains well below normal.
One paradox of the current market is that, with overall sales still light, stable income-producing properties are enjoying a nice bounce in values. Stable properties have attracted heavy attention from investors whose pockets are lined with cash, but have nothing to spend that cash on. Investors are flocking to properties with predictable cash flow streams, bidding up prices in the process.
That’s why 80 Wilson Way, an unglamorous-looking flex building in the suburbs, has the potential to attract attention. The New Boston Fund bought the property from ADE Corp. in 2003. As part of a sale-leaseback agreement, ADE signed a 15-year lease at the property, guaranteeing the building’s owner predictable income until 2018.
On a different scale, that type of stability turned One Brigham Circle into 2010’s biggest sale. The property, which sold to Boston-based AEW Capital Management, is anchored by Partners Healthcare and a Stop & Shop. The New Boston Fund had $60 million in debt on the property.
Kelleher pronounced himself “pleased, but not surprised,” at the bidding frenzy that One Brigham Circle attracted.
“High-quality, stable assets with a long, steady income stream are getting a lot of attention and generating good prices,” Kelleher said. “We had 97 registered bidders, an incredibly high quality group of investors, and the pricing reflected that. We were happy with the pricing, and we were happy to be able to sell to another Boston-based firm. AEW is a smart, successful investor. They were able to buy for less than they would have paid two years ago, and it was a good price for us.”
