The building housing the Boston Celtics’ corporate headquarters at 226 Causeway St. in Boston is on the market for $43 million – but one local company may already have the competition boxed out.
Recently, an affiliate of Boston-based real estate developer and manager The Davis Cos. purchased $11 million in mezzanine debt on the property, presumably at a discount, from Barclays. The building carries a $30 million first mortgage. Both mortgages mature in December.
Come December, if owner Archon Group does not sell the building at a price sufficient to pay off the Davis affiliate, Archon would need to pay off the loan or give up the keys – and Davis would own the property at a steep discount, according to a source familiar with the deal.
The building features 193,000 square feet on the first six floors of the building. The remainder of the 396,000-square-foot property is condos. Archon bought the building for approximately $53 million in 2006. One observer said he thought the current asking price was too high, especially given the approximately 52,000 square feet vacated by the Massachusetts Land Court.
As first reported by Banker & Tradesman, the Land Court announced last year it was erasing the final three years on a lease it held at 226 Causeway, and walking away from $9 million in rent payments thanks to a clause in its lease.
The court’s lease, which Banker & Tradesman obtained through a state public records request, contained a clause allowing the court to abandon its space “without any liability whatsoever” if legislative appropriations weren’t sufficient to meet its monthly rent obligations. The Legislature cut the Massachusetts Trial Court’s budget by 12 percent in the two fiscal years prior to the lease cancellation.
Either way, the owner now has “meaningful interest at or near” the asking price, a source told Banker & Tradesman. Notable tenants include the Celtics and the Boston offices of Oxfam America, part of the humanitarian and social justice organization Oxfam International.
“That’s a great piece of real estate,” the source opined. “It’s complicated because it has condominium units … but it’s one of the nicest, if not the nicest, brick and beam buildings in downtown Boston, and it’s in an area that’s undergoing very dramatic changes. Even though there’s some vacancy and the office market downtown is a little weak, I think there’s demand for that kind of brick and beam, loft-style space, especially with younger companies.”
