The 1.1 million-square-foot office tower at One Beacon St. in Boston is owned by Prudential Real Estate Investors and Westbrook Partners.
In the wake of previous unsuccessful efforts to trade Boston’s One Beacon St., an attempt by a New York investment group to acquire the 34-story office tower appears to be foundering, industry sources claimed last week. The 1.1 million-square-foot structure is owned by a joint venture between Prudential Real Estate Investors and Westbrook Partners.
“I don’t think it’s going to happen,” one broker familiar with the negotiations opined of a deal being consummated. “I think [Prudential and Westbrook] are going to sit tight like they have been.”
One Beacon St. had been on the market in 2002, with Cushman & Wakefield of Massachusetts retained to trade the asset. A pending sale with Broadway Partners of Connecticut in the $340 million range fell apart in late 2002, reportedly after Broadway officials failed to assemble the needed financing. Various rumors of sales have since been floated prior to the most recent initiative, but no actual transaction has ever materialized.
An industry newsletter, Real Estate Alert, floated the names of the latest suitors several weeks ago. The high-net-worth investors, some of whom had participated in Joseph Chetrit’s recent chase to acquire the Sears Tower in Chicago, have yet to ink an agreement to purchase One Beacon St., claimed one source. “Nothing is in place,” insisted the source, countering reports that such a pact has been struck. The source also characterized the prospects of a deal ultimately happening as “thin.”
Efforts to contact the prospective buyers and officials at both Prudential and Westbrook were unsuccessful by press deadline. Cushman & Wakefield of Massachusetts President Robert E. Griffin Jr. declined comment on the matter when contacted Friday, and would not say whether his firm is participating in any ongoing discussions. Griffin did explain that the ownership of One Beacon St. has been approached with unsolicited offers from several capital groups in recent months, but would not elaborate on how the New York bidders became engaged with the tower.
If the buyers did make the initial overtures for One Beacon St., the approach would be similar to that which occurred with the Sears Tower, which Chetrit and his New York-based backers recently purchased for $840 million in what proved to be the Windy City’s largest property sale of all time. Not only are owners increasingly keeping their sales campaigns quiet, unprovoked bidders also seem to be on the upswing, for reasons that are not readily apparent.
The broker tracking the One Beacon St. talks suggested that buyers are being forced into taking preemptive action, given the excessive amount of capital pursuing commercial real estate at present. Especially for assets with strong-credit tenants or those sporting any measure of stability, advertised deals are drawing substantial competition, making it difficult for buyers to complete acquisitions without paying a hefty premium.
The phenomenon is particularly acute in downtown Boston. Certain assets on the block, such as 245 Summer St. and 7 Water St., could yield record pricing and capitalization rates as low as the 5 percent range, according to some observers. Those two properties are being sold by Fidelity Investments, which also occupies the buildings. That presence will offer any buyer the comfort of a top credit tenant, an element treasured by investors in the current economic climate. Most properties featuring a measure of risk are having a harder time finding buyers, with Class B assets in particular seen as being in jeopardy should leasing volume remain depressed for any length of time.
‘Tons of Activity’
If a deal for One Beacon St. is successful, it would be one of the largest real estate happenings of 2004 in the Hub, with only the sale of One Lincoln St. this winter for $705 million likely to eclipse the pricing. Even so, the city does have a number of significant properties in the pipeline, and investment sales specialists say they are enthused by the velocity of business underway, particularly as the typically slow summer season kicks into gear.
“There’s tons of activity,” said Catherine F. “Cappy” Daume of Spaulding & Slye Colliers. “Deals are taking a little longer, but the amount of people interested in Boston continues to be very high.” Spaulding & Slye recently brokered the sale of One State St. in the Financial District for $13 million, for example, and is marketing several other Beantown properties, including 745 Boylston St. in the city’s Back Bay district.
Sited prominently at the foot of Beacon Hill and on the edge of Boston’s Financial District, One Beacon St. features a location that has drawn a range of tenants since it opened in 1972, with both governmental agencies and financial firms prevalent in the building. Along with MassHousing, other leading tenants in the building include One Beacon Insurance, JP Morgan Investing and the Berkshire Group. Along with certain capital improvements, the owners have undertaken an aggressive leasing program in recent months to bolster tenancy at One Beacon St. CBRE/Whittier Partners is leasing agent for the tower.
