Samuels Property Group is placing 625 Massachusetts Ave., a 120,000-square-foot office and retail property in Cambridge’s Central Square, up for sale with an asking price of $42 million.
Lured by a surge of capital chasing commercial real estate, the owner of two Cambridge buildings has placed the assets up for sale, with Samuels Property Group hoping to yield more than $50 million from investors. The larger of the offerings is 625 Massachusetts Ave., a 120,000-square-foot office/retail property situated in the heart of eclectic Central Square, while 54 CambridgePark Drive in the city’s Alewife district is a 2-story office/research building occupied by Wyeth Pharmaceuticals.
“We’re expecting strong interest,” said principal Michael G. Smith of Spaulding & Slye Colliers, whose investment sales team has been retained to market the properties on behalf of Samuels. The buildings will be available either as a package or for sale separately, said Smith, with an asking price of $8.5 million placed on 54 CambridgePark Drive and a healthy $42 million being sought for 625 Massachusetts Ave. Besides exceptional credit tenants in both buildings, including Harvard University’s lease for a major portion of the office space at 625 Massachusetts Ave., Smith said the assets are attractive due to favorable locations, substantial capital improvements by Samuels and the opportunity for steady cash flow and potential future upside.
Interestingly, Smith and Spaulding & Slye principal Cappy F. Daume brokered the sale of nearby 1414 Massachusetts Ave. in Cambridge earlier this year, a deal which bears numerous similarities to the Samuels building in Central Square. Acquired by Wells Real Estate Funds, 1414 Massachusetts Ave. is also a multi-level office/retail development which has Harvard as a key tenant – in the latter instance, the institution occupies nearly 50,000 of the building’s 78,000 square feet. That property also traded in the $42 million range, although the sales price per square foot would differ given the greater size of 625 Massachusetts Ave.
Efforts to contact Samuels Property co-founder Jonathan H. Samuels by press deadline were unsuccessful, but observers said the decision to sell both Cambridge properties was likely a function of the normal deal cycle and a desire to take advantage of the overheated investment climate. Samuels and partner Francis N. Mastroianni paid $11.8 million in the summer of 1999 for two buildings later combined into a single address and repositioned as 625 Massachusetts Ave., then set about recasting the aging structures into a mix of modern storefronts and office space.
The overhaul included buying out existing tenants, particularly a lengthy lease held by Central Square veteran F.W. Woolworth, while a Foot Locker on the premises also was shuttered. The properties underwent an extensive physical transformation, while aggressive leasing programs led to the Harvard pact, as well as retail agreements with such firms as the Gap, Boston Sports Club and Walgreens. The drugstore behemoth’s 12,000-square-foot space has been one of several changes that have helped bring new life to the bustling district.
Getting the Numbers
The Samuels initiative coincided with the ongoing development of University Park at MIT, a sprawling office/research complex which subsequently opened a new hotel, supermarket and block of residential units just a few doors down from 625 Massachusetts Ave. Across the street, a project that was barely a hole in the ground when Samuels began its restoration is now the completed 630 Massachusetts Ave., another blend of high-class office, residential and retail space that has provided further spark to Central Square. A bit farther east on Massachusetts Avenue, the arrival of Novartis AG into a 500,000-square-foot office/research complex promises even greater days ahead for the area, with the Swiss-based drug giant gradually moving into the longtime home of the New England Confectionary Co.
Samuels Property Group purchased 54 CambridgePark Drive a year after committing to 625 Massachusetts Ave., paying $3.2 million to acquire that structure. As with the Central Square property, Samuels has just completed an extensive physical renovation of the Alewife building, which is fully occupied by Wyeth.
Given the various attributes of both assets, Smith said he believes investors will flock to the opportunities, noting that tenant credit is a critical element in how popular a property might be in the unsteady economic climate. Wyeth and Harvard would certainly meet nearly any standard of credit strength, while the renovations undertaken by Samuels Property Group would seem to quell any physical concerns about the buildings. When those key issues are addressed, commercial properties are garnering a favorable response from investors, Smith said.
Spaulding & Slye Colliers itself has already sold several properties in Greater Boston in 2004, and has several others in the pipeline. Overall, Smith said he is encouraged by the pace of interest for Greater Boston real estate, although he also acknowledged that there have been some roadblocks on the investment sales trail. “Deals are taking longer to get done,” said Smith, save for those properties offering the best fundamentals.
In certain instances, buyers appear to be getting spooked whenever they come across due diligence questions or uncover shortcomings in the rental roster. Also lending to the volatile nature of transactions, Smith said, is unwillingness by sellers to depart from their original asking price. “They believe they will get their number, and if they don’t, they are less willing to bend,” said Smith, who is marketing the Samuels assets along with Daume, Senior Vice President Scott J. Jamieson and principal Jeffrey B. Swartz.
