Boston’s Two Liberty Square, which is fully leased to Putnam Investments, reportedly has found a buyer in ELV Assoc.
More than four months after it was taken off the market, the Boston headquarters of Putnam Investments is under agreement to a new buyer, with industry sources telling Banker & Tradesman last week that ELV Assoc. has agreed to acquire the 8-story building for an undisclosed price. Located in the Hub’s Financial District, Two Liberty Square is fully leased to Putnam.
“It is them,” one source offered last week in identifying ELV Assoc. as the building’s latest suitor. Despite that strident stance, as well as similar reports from others that claimed a purchase-and-sale agreement has been signed, ELV principal Scott Jenkins said last Friday he was “not in a position to discuss” the matter. Equally mum was Spaulding & Slye Colliers broker Michael G. Smith, whose firm was retained earlier this year to sell the 68,000-square-foot building. Smith declined comment, while efforts to contact owner Robert M. Day of Atlanta-based Edwards Day Investments were unsuccessful by press deadline.
In an interview with Banker & Tradesman this summer, Day did acknowledge that Two Liberty Square had been taken off the investment market for reasons not made public. According to industry sources, however, the asset was pulled due to a pre-payment clause of a loan Edwards Day had obtained to purchase Two Liberty Square in 2000 for $12 million. At the time, Smith had said the building received considerable attention from the investment community, with others claiming there was actually an agreement in place when the pre-payment issue quashed the transaction. In any event, it now appears that whatever financial roadblocks were in place during the summer have been resolved enough for Two Liberty Square to change hands.
Meanwhile, Putnam’s ongoing regulatory woes have seemingly done little to dampen Two Liberty Square’s value as a real estate investment. A centralized location in downtown Boston, plus lease agreements with Putnam that extend out to 2011, are said to be among the building’s main attributes. Putnam’s leases do reportedly begin expiring as soon as 2007, but one observer familiar with the asset said it is nonetheless viewed as one of the more stable buildings available in the city at present.
“It is a great property,” said the source. “It’s a structurally solid building, and you just won’t find a better location.” Constructed in 1913, Two Liberty Square was renovated in 1997 into upscale office space, leading to the long-term lease with Putnam. Prior to Edwards Day, the building had been owned by a German investment group, which paid $10.8 million for it in 1998.
Backed by a British investor, ELV Assoc. has had a lengthy presence in Massachusetts commercial real estate, with the firm located in space it owns at Long Wharf on Boston Harbor. ELV remains involved in a range of investment endeavors, according to Jenkins, including ownership of suburban office parks and a number of residential projects. Among the latter grouping, ELV is developing an East Boston property into 217 loft-style condominiums and recently converted Boston’s 314 Commonwealth Ave. into four luxury condominiums that traded for upward of $4.5 million.
According to sources, the Two Liberty Square deal is likely to close in early 2005, even though much of the groundwork has been completed this year. Even if the deal does not register for 2004, Greater Boston seems destined for a record year in commercial property sales, with several billion dollars in real estate expected to trade by year’s end. Spaulding & Slye itself has had a solid campaign, having already brokered the sale of several prominent assets throughout the region. Along with several deals in the downtown market, Spaulding & Slye also recently completed the $32 million sale of 745 Boylston St. in the city’s Back Bay District, and is negotiating the disposition of other local assets as well, including One Washington Mall adjacent to Boston City Hall.
Office buildings have generated a mix of interest from investors, with the variation fueled largely by the status of a given property’s rental roster. If a building possesses good credit tenants and substantial lease term, it is typically attracting record pricing, as witnessed by the $705 million sale of Boston’s One Lincoln St. office tower to start the year. Other office assets have also brought in impressive pricing, including the $340 million just paid for One Beacon St. and the sale of several buildings owned by Fidelity Investments, including 245 Summer St.
Buildings carrying onerous vacancy levels have not been as easy to move, however, so much so that some properties have sold at less than what the owner had originally paid. At 100 Franklin St., for example, SSR Realty Advisors accepted a $19.5 million bid this summer even though it had paid more than $27 million just a few years earlier, while the firm also accepted a discount when it sold the nearby 211 Congress St. In both cases, the properties had large vacancy holes to plug, apparently keeping some potential investors at bay.
