Boston Capital Institution Advisors has sold 99 High St. in Boston after owning the property for just one year.

It became a national powerhouse syndicating tax credits for low-income housing, but Boston Capital Institutional Advisors is proving to be a quick study on the commercial end of real estate as well. Barely a year after scooping up the Hub’s 99 High St. office tower for $168.5 million, the company has flipped the property to a partnership between Walton Street Capital and Westbrook Partners for an impressive $213 million.

“It was a very good trade for us,” BCIA principal Samuel Byrne acknowledged last week. “I think our investors will be happy.”

Sources said Walton Street turned its attention to 99 High St. after unsuccessfully attempting to buy a half-interest in nearby 75-101 Federal St. The company had already made a strong foray into Boston during 2000 with its acquisition of One Boston Place ($188 million) and 10/Ten Post Office Square ($107 million). The Chicago-based firm has ties to JMB Urban, another Windy City company which helped shape Boston’s Back Bay in the 1980s with the development of Copley Place and 116 Huntington Ave. JMB left the city in the early 1990s after a failed effort to convert the Sears Building in the Fenway into biotech and laboratory space.

Calls to Walton Street and Westbrook were not returned by press deadline. Byrne characterized the deal as stemming from “an unsolicited bid” by the new owners. Although the fund that acquired 99 High St. does have a relatively short investment time frame of three to five years, Byrne said it was an unusually quick turnaround for BCIA.

“We assessed the price at what we were into the building for and made a decision that we felt was best for our investors,” Byrne said. “It just seemed to make sense to us.”

Certainly the difference in pricing would appear to justify that outlook. When it first locked up the property in the autumn of 1999, the capital markets had entered into a temporary lull, reducing the number of suitors that might normally have chased the 32-story tower. BCIA, as Byrne said, “stepped quickly and bought” the 730,000-square-foot building at a price of $230 per square foot, with the deal closing early last year. The Walton/Westbrook partnership paid $291 per square foot. By comparison, Boston Properties and a New York pension fund paid $298 per square foot last summer for nearby 265 Franklin St., while 10/Ten Post Office Square fetched $260 per square foot. By late in the year, some Boston office buildings sold at or above $300 per square foot.

From his perspective, Byrne said he believes 99 High St. attracted attention partly due to continued interest in Boston’s office market, but also because of the quality of the asset. The 31-year-old tower underwent an extensive overhaul in the early 1990s, with more than $50 million pumped into new mechanical systems, refurbished common areas and facade improvements.

“Functionally, it’s a new building,” said Byrne. Long-range prospects look good as well. Not only will the tower be a major beneficiary when the abutting Central Artery is torn down, the property’s rent rolls also have significant upside, especially from a below-market lease by Fidelity Investments.

“We wouldn’t have had any problem holding that asset,” Byrne said. “I think [the new owners] will do well with it.”

‘Great’ Prospects
If anything, the sale helps kick off the 2001 investment season in a positive way, with several other tower sales also said to be nearing completion. Banker & Tradesman reported last month that Jamestown, an Atlanta-based investment advisor, has secured One Federal St. for an estimated $385 million. A General Motors pension fund, meanwhile, is said to be in the closing stages of locking up the partial interest in 75-101 Federal St.

“Deals are getting done,” said CB Richard Ellis/Whitter Partners principal Gary W. Lemire. While the first quarter was slower than normal, Lemire said he believes Boston’s investment market will pick up steam in the coming months. Along with last week’s 0.5 percent interest rate drop, Lemire said that some investors believe the cooler economy might offer better-priced assets than have been seen locally in some time. Byrne noted that the Hub remains in the top three nationally for investor interest in commercial real estate.

“A lot of investors believe the long-term prospect for real estate in Boston is great,” Lemire said.

One reason is the perceived difficulty in developing new space. Lemire estimated that Greater Boston currently has 4.4 million square feet of new office space in the pipeline, or about a third of that underway in the Washington, D.C., market. Whenever the economy shows signs of slippage, speculative activity appears to halt almost immediately, Lemire added, a likely outgrowth of the real estate crash suffered by overbuilding in the late 1980s.

“There’s a lot more discipline today, and hopefully that will begin to pay off,” he said.

$213 Million Office Tower Sale A High Note for Boston Market

by Banker & Tradesman time to read: 3 min