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The latest iteration of a $580 million air rights project partially built over the Massachusetts Turnpike in the Fenway would begin with a 313-unit apartment complex.
Developer John Rosenthal of Newton-based Meredith Management is partnering with developer Gerding Edlen of Portland, Oregon on the 1.2 million-square-foot mixed-use project, which has been delayed by litigation and financing obstacles. The team has lined up $230 million in financing for the first phase, Rosenthal said. The apartments would be built on two acres of parking lots at the corner of Beacon and Maitland streets.
The Boston Globe first reported the proposed changes. To move forward, the developers need permission from the Massachusetts Department of Transportation, which is leasing the air rights for the properties.
“Most large projects are phased. Most investors cannot do $580 million projects in one phase,” Rosenthal told Banker & Tradesman. “The universe is bigger when you get into that range.”
The $230 million in financing includes $100 million in equity from Rosenthal, Gerding Edlen and an institutional investor, Rosenthal said, and $130 million in debt from an insurer.
The existing agreement with MassDOT calls for a 99-year lease with $226 million in total payments, including a $5.5 million up-front payment.
Rosenthal said the developers are willing to pay $20 million up front, which equals the entire lease payments for the first phase of the project. The phase II rent would be subject to renegotiation with MassDOT, Rosenthal said. The latest proposal was submitted to the agency in April, and the developers are awaiting a response, he said.
The project has substantial infrastructure costs related to construction of a 100,000-square-foot deck above the highway to support three buildings. Rosenthal said the deck will cost $80 million.
Plans approved by the BRA in 2009 call for 500 residential units, 170,000 square feet of office space and 90,000 square feet of retail along with the $15 million reconstruction of the MBTA’s Yawkey commuter rail station, which was completed in 2014. The second phase would include a 27-story tower with offices, housing and retail above the Pike.
In 2014, the Boston Redevelopment Authority granted a $4.6 million tax break for the project.
Fenway Center would be the first development built in Boston using air rights since Copley Place in 1980.
In addition to financing hurdles, the project was delayed for three years by a lawsuit filed by an abutter, HRPT Medical Buildings Realty Trust. That suit was dismissed by the state Land Court.
