226 Causeway St.The recent decision by the Massachusetts Land Court to relocate to a Pemberton Square courthouse could instigate a costly fight with Goldman Sachs.

Goldman’s real estate arm, Archon Group, owns the Boston building at 226 Causeway St. where the Land Court is currently located. The court moved into the building seven years ago, and expanded into 62,000 square feet in 2008. Its lease expires at the end of 2013.

"It’s our conviction that we have a binding lease in effect, and we will pursue any and all avenues to that effect," said Michael Vaughan, a spokesman for Archon.

He said Archon invested millions in significant tenant improvements to customize the Land Court’s space, and hoped to retain the court as a tenant. He added, though, that if the Land Court walked away from its lease, Archon’s lawyers would seek damages in court.

Yesterday Robert Mulligan, the state’s chief justice for administration and management, said the Land Court would relocate to the Suffolk County Courthouse by the end of December. In a press release, Mulligan said the move was meant to address the Massachusetts Trial Court’s fiscal year 2011 budget deficit.

Mulligan called the Land Court’s lease at 226 Causeway "one of the largest leases in our portfolio," and said the move to Pemberton would save $2.7 million annually.

The release noted that the state Legislature granted the Trial Court "authority to manage lease expenses in addressing the significant budget shortfall."

Archon, however, contends that authority only extends to restructuring leases, and argues that the state has no legal authority to walk away from a signed lease at will.

A spokeswoman for Mulligan was not available for comment.

Archon purchased the 193,000-square-foot commercial condominium at 226 Causeway St. in 2006 for $52.3 million. The property is secured by a $43.7 million mortgage. Archon marketed the building for sale earlier this year, but pulled it off the market, reportedly because the property was producing healthy returns.

 

Land Court Move Could Spark Legal Battle

by Banker & Tradesman time to read: 1 min
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