The new home of the Boston Stock Exchange and an office rehab that embarrassed the state of New York are the latest Hub properties to change hands, according to industry sources.
The property at 100 Franklin St., a 106,000-square-foot building overhauled three years ago by the Intercontinental Cos., is being acquired by State Street Realty Advisors, while a German investment group has agreed to buy 45 Milk St., a 71,000-square-foot facility renovated into office space during the 1980s.
Calls to State Street were not returned by press deadline, but sources insisted that 100 Franklin St. is under agreement to SSRA, a subsidiary of MetLife. Intercontinental principal Paul Palandjian declined comment on the matter.
One of the Hub’s more storied properties, 100 Franklin St. will reportedly sell in the $26 million range, according to one source. While stressing that the deal has not closed, the source said it could be wrapped up as early as this week.
If the $26 million figure is correct, it would seem to justify Intercontinental’s investment, made through the Brighton firm’s inaugural real estate opportunity fund. Focusing on value-added investments, Fund One ultimately purchased five properties, with $10 million used to buy 100 Franklin St.
The one-time home of the powerful Boston Coordinating Committee, aka the Vault, 100 Franklin St. underwent an extensive overhaul, with Intercontinental spending $4.5 million on mechanical systems, new windows and common area improvements, while another $9 million was pumped in by the stock exchange to create a lavish trading floor.
While he declined to discuss the 100 Franklin St. situation, Palandjian did acknowledge the success of Fund One. Besides 100 Franklin St., three of the other properties have already sold, while the fourth, 358 Chestnut Hill Ave. in Brookline, is reportedly also under agreement. Most recently, Intercontinental sold One Bulfinch Square in downtown Boston for $18.7 million.
“It has been a huge success for us,” Palandjian said of the opportunity fund. “With each of the fund’s assets, we have outperformed our targeted returns.”
‘Jewel Box’
Just around the corner from 100 Franklin St., Lambert Smith & Hampton is reportedly acquiring 45 Milk St. from a German investment group. The buyers are also said to be from Germany, represented by Atlanta-based LS&H, which has purchased several properties recently on behalf of overseas clients. Other buildings which LS&H have bought include Two Liberty Square, another Financial District rehab. The company also just secured a three-building portfolio from Hub Properties LLC, paying $35 million for 303 and 313 Congress St. in Boston, as well as 150 Newport Ave. in Quincy.
Calls to LS&H and Trammell Crow, which is marketing the property, were not returned by press deadline. Sources said the acquisition price is in the $21 million range. If so, that would represent a significant recovery for a property whose value has bounced around dramatically during the past 12 years.
Although the 107-year-old property is considered one of the city’s best office restoration projects, the $25.6 million purchase in 1988 by New York’s state pension fund became embroiled in controversy when it was learned that the broker was connected to the state’s comptroller. At an estimated $360 per square foot, the deal exceeded what most Class A properties were fetching at the time, and came to be used as an example of the buying frenzy prevalent in the final days of the 1980s real estate boom.
New York finally unloaded the building in 1996 for just $8.8 million, but the market’s recovery since indicates that the pension fund might have been better served to wait out the recovery. With 71,000 square feet, the reported $21 million deal would place the per-square-foot price for the new buyers at about $295.
Despite its ups-and-downs, 45 Milk St. has always been considered one of the city’s premier office rehabs. Insignia/ESG broker Timothy Lyne, leasing agent for the building, said “there has always been a lot of tenant demand” in the years since he has been involved in the property.
“It’s just a great building all around,” said Lyne, who declined to discuss the rumors of a sale. “It’s a real jewel box property.”
