Shorenstein Snaps Up Boston Office Building
What a difference six months made for an office building in Bostonís Seaport District.
A Rockpoint Group partnership listed the 461,000-square-foot property last fall, but failed to find a buyer amid a crowded sales market. But now Shorenstein Properties has agreed to pay $115 million for the building, at 451 D Street.
The $249/sf price tag equates to a 6.5% initial annual yield. Eastdil Secured is the broker.
The nine-story building, known as Seaport Center, has 349,000 sf of office space, 72,000 sf of telecommunications space, 27,000 sf of laboratory space, 4,000 sf of retail space and 9,000 sf of storage space.
The occupancy rate is 95%. The tenants include J.P. Morgan (23% of the space), Boston Herald (11%), Boston Coach (6.3%), Verizon Communications (6.2%), Monster Worldwide (5.9%) and Digital Realty (2.7%). Those occupants, which account for 59% of the income, have leases with an average remaining term of seven years. Shorenstein, a San Francisco fund shop, should be able to lift below-market rents as leases expire.
Rockpoint and another Boston investment firm, Beal Cos., acquired the property for $40 million in 2006, when it was only 35% occupied. The duo then invested $3.3 million on renovations, renewed leases for existing tenants and brought in new tenants.
When Eastdil got the listing last fall, about a half-dozen other properties were on the block. Unable to strike an acceptable deal, the Rockpoint team instead considered taking cash out of the building by refinancing its debt. In fact, given the favorable lending conditions and the propertyís improving cashflow, local pros thought a refinancing was likely.
But the partnership continued to shop the property to a handful of investors. Interest picked up when relatively few competing listings emerged this year. Whatís more, the Seaport District has been attracting more attention from investors, thanks to its 95% office occupancy rate and the recent development of high-end hotels, restaurants, stores and residential properties.