If all goes to plan, Equity Office, an affiliate of The Blackstone Group, will sign a couple of new leases for more than 50,000 square feet at a pair of Alewife-area properties it acquired earlier this summer – all within 45 days of owning the properties.

That’s in addition to a 20,000-square-foot renewal. It’s a remarkable series of scores for a pair of properties that were only 48 percent occupied at the time of the purchase. And it begs the question – why couldn’t the former owner have equal success?

The answer lies in shrewd timing, and in the recognition that Equity/Blackstone are assuming substantial risk if they can’t position themselves as a suitable alternative to Kendall Square and attract the kinds of rents needed to subsidize their purchase and improvement costs.

In June, the company bought 125 and 150 Cambridgepark Drive in Cambridge’s Alewife neighborhood for $81.5 million, as first reported by Banker & Tradesman. It is the second time Blackstone has been involved with the properties, paying approximately $84 million for the roughly 440,000-square-foot campus in 1999.

“We had the opportunity to buy them for less than we paid [in the nineties], and that was wildly attractive to us,” said Andrew Maher, managing director for Equity Office in Boston. “When the East Cambridge and Harvard Square pricing rises, this submarket does very well.”

But not all of Maher’s peers agree.

Several brokers interviewed for this article said that even when the desirable East Cambridge market centered around Kendall Square gets so tight it begins to push tenants out – as it has been doing to a degree for the last several months – most opt for cheaper, more hassle-free digs in further-flung Burlington or Waltham. That leaves the Alewife area, on the outskirts of Cambridge, stuck in the middle.

“It’s not any secret that Alewife’s been struggling,” said one real estate executive. “[The new owners] need to fill a good chunk of space. It’s never easy in West Cambridge. But Equity is a very smart owner. They obviously had a fully developed investment strategy when they bought the buildings. I have no doubt they did their homework and understood the challenges out there. You hope you’re not starting flat-footed.”

Fix It, Lease It

Equity said it plans to invest up to $10 million in both buildings for lifestyle and fitness centers, shared conference rooms and other updated or new amenities. It’s a pretty standard case of “buy it broken, fix it and lease it up,” Maher told Banker & Tradesman.

Shopximity, an internet company that aims to help buyers buy local products, signed a lease for approximately 5,000 square feet. Maher could not provide the names of other prospective tenants, citing confidentiality agreements.

And according to sources, former owner Barclays Capital was actively looking for tenants and had retained CB Richard Ellis to market the space before its sale. Once a building is under agreement for purchase, the new owner has the right to see what deals are pending. At that point, Barclays would have needed Equity to sign off on any deals before moving forward with them.

While it’s hard to know the exact inner workings, sources said it would make sense if Barclays was able to set up some deals, with prospective tenants likely touring the space in late spring or early summer. Maher did confirm one pending deal for 50,000 square feet that is brand new to the building, and involves a tenant that had not considered the property before Equity brought them in. Another deal is a 20,000-square-foot renewal, leaving the 5,000-square-footer the only deal lined up by the former owner, Maher added.

Further sweetening the pot for potential tenants, the properties now also have the confidence that comes with an established operator like Equity at the helm, with Blackstone behind it. The firms have a reputation for making promised tenant improvements.

“Tenants might want to be at a building in a certain area, but when the building itself is in question, then tenants won’t go there and leasing brokers won’t bring tenants there,” said another commercial real estate executive. “Whereas, if you know Equity or Blackstone is buying and managing it, you know the [tenant improvements] will be there and they will be able to fit-out the space.”

‘A Pretty Big Risk’

But while a solid name and reputation will account for some extra business, Equity and Blackstone must still grapple with the cold fundamentals of the Alewife market.

A little history on the campus – Blackstone bought it in 1999 for $84 million, only to turn around shortly thereafter and sell it to JP Morgan for $97 million in 2001. JP Morgan then flipped the properties to a subsidiary of the Archon Group for $127.9 million. Barclays took the campus back at a foreclosure auction last year after Archon lost it.

This year, Blackstone’s purchase price dropped to $81.5 million. That price includes an adjacent parcel for a potential build-to-suit property with development rights up to 335,000 square feet. But even the discounted sales price has some local brokers scratching their heads after doing the math.

A cost basis of approximately $185 per-square-foot, with another $10 million put into the buildings at roughly $23 a foot, means Blackstone is putting about $208 a square-foot into the buildings.

Class A rents around Alewife only average roughly $28 a foot. Blackstone/Equity will need to beat that figure for their gamble to pay off.

“They’re going to need to have some pretty significant rent growth in that part of town for this deal to make sense,” said one broker with knowledge of the deal. “Rents in the high $20s don’t get it done. You would need rents to be at least in the mid $30s to make sense.”

And there are only a handful of tenants with requirements of more than 40,000 square feet in the Cambridge office market – and most if not all are planning to stay where they are or move to Kendall Square, said another local broker.

“I think they’re taking a pretty big risk, and paying a very healthy price, for those buildings,” said one real estate professional. “A lot of times when Kendall Square tenants look outside Kendall, they look to Lexington and Waltham as well. [Alewife is] often times passed over. It’s such a head-scratcher. There’s the land parcel, even though land in Alewife isn’t worth [more than] maybe $25- to $50-per-foot for land.”

Still, Maher said Equity Office was confident in its purchase.

“Whether our assets are in Burlington or East Cambridge or Newton, we have a good feel of what’s out there … and utilize our strengths to entice tenants to our buildings,” Maher told Banker & Tradesman.