ELV Assoc. has paid $15.2 million to Edwards Day Property Investments for Boston’s Two Liberty Square.
There were a few twists and turns along the way, but after several months on the trading block, Boston’s Two Liberty Square has finally changed hands, with ELV Assoc. acquiring the Financial District office building from Edwards Day Property Investments for $15.2 million.
“It was a fair price,” Edwards Day principal Robert Day told Banker & Tradesman last week following the closing of the transaction a few days earlier. “We were happy [with the outcome].”
The Atlanta-based real estate investment firm had owned Two Liberty Square since mid-2000 when it paid $12 million for the 8-story, 68,000-square-foot building.
During the Edwards Day tenure, Two Liberty Square served as the headquarters of Putnam Investments, but the mutual fund company has vacated all but the first floor of the building as part of a consolidation plan to nearby One Post Office Square. Mired in a damaging controversy over its market-timing investment practices, Putnam has a lease remaining on the first floor that runs until 2011, and is also still responsible for the remaining space until sometime in 2006, according to industry sources.
Spaulding & Slye Colliers guided Two Liberty Square through the lengthy sales effort, a process slowed by a prepayment complication on the building’s financing that resulted in the asset briefly being taken off the market last summer. That issue was ultimately resolved, however, and Edwards Day was able to proceed with its disposition strategy that led to ELV’s commitment in late 2004 that resulted in the final deal. The sale equated to about $225 per square foot.
Principals Catherine F. Daume and Michael G. Smith of Spaulding & Slye Colliers’ Investment Sales Group brokered the deal on behalf of Edwards Day along with Senior Vice President Scott J. Jamieson, while the firm also secured the buyer. Reached last week, Daume declined comment on the negotiations. ELV Assoc. principal Scott Jenkins referred questions about the building’s current status to Spaulding & Slye Colliers Senior Vice President William F. Collins, who has been retained along with Assistant Vice President Benjamin D. Heller to market Two Liberty Square for lease.
Collins and Heller were both unavailable as of press deadline last week to discuss the leasing prospects for the building, a challenge they will undertake at a time when the city’s office leasing market is experiencing a glut of competing space being added to an already bloated inventory. According to Spaulding & Slye, for example, the Financial District had 3.97 million square feet of available office space at year-end 2004, putting the availability rate at 18.3 percent.
Despite the continued struggles of the leasing sector, Daume said she is generally encouraged about the prospects for 2005 from an investment sales perspective.
‘Another Good Year’
“It feels like it’s going to be another good year,” said Daume, whose firm brokered a number of significant sales in the Hub in 2004, including the nearby One State St. and 745 Boylston St. in the Back Bay. As with many local investment groups, Spaulding & Slye carried over a few deals into the new year, among them 18 Tremont St. and One Washington Mall in downtown Boston. Along with those properties, Spaulding & Slye is gearing up to take on new opportunities throughout the region, said Daume, although she would not identify any of the sales assignments the firm is pursuing.
Given the surge of activity in 2004, it might seem that there would be few real estate prospects to chase in the coming months, but Daume said she believes opportunities will be there as long as the capital continues to show interest. “And I do feel comfortable the money will be there,” Daume added of the upcoming campaign, noting that interest rate hikes that were expected to slow the surge have yet to arrive
The sale of Two Liberty Square marks the end of a seven-year affiliation for Edwards Day, which also brought in the German investor from whom it purchased the building in 2000. The Rhineland owner had paid $10.8 million for the building in 1998. Originally built in 1923, Two Liberty Square was renovated in 1997, at which time it was occupied by Putnam Investments.
The disposition of the building does not signal reduced interest in Boston, Day stressed, insisting that his company remains confident in Boston’s long-term future even as the region fights to rebound from serious employment deficits and lingering problems throughout the financial services sector.
Edwards Day’s belief in the Bay State is underscored by its ownership of two Fort Point Channel office buildings at 313 and 330 Congress St., noted Day. Indeed, the firm last week also completed a $14.2 million refinancing of those two properties, which total 160,000 square feet. Hit hard by the technology slump that began in mid-2001, Fort Point Channel and the larger Seaport District in which it is located have seen a sharp jump in office vacancy rates in the past three years, but Day said he is encouraged by an increase in prospective tenants considering the area at the outset of 2005. Spaulding & Slye’s Heller is overseeing leasing at the Congress Street buildings as well. “Ben has done a fine job in a real tough market,” said Day, who placed the occupancy rate in the two properties in the 80 percent to 90 percent range.
