BOSTON-What a difference a year–and a day can make. Precisely that long after Paradigm Properties acquired 263 Summer St. in the city's Fort Point Channel District, the local real estate investment firm has traded the eight-story, 57,000-sf office building to National Development of Newton for a handsome return. APCA 263 Summer LLC paid $10.3 million for the asset, compared to $16.1 million doled out by the new owners.
“It's a good story,” Paradigm principal Steve Allison tells GlobeSt.com in confirming the disposition. “I think our investors are very happy.” The building was purchased on behalf of a fund stocked by high net worth investors, a vehicle that has acquired nine assets to date, several in Massachusetts. Paradigm had intended on holding onto 263 Summer St., with Allison stressing the firm believes in the district's future, but given the ardor among buyers, the decision was made to offer the building to a select cadre of likely prospects, including National Development.
“It wasn't easy,” Allison says of departing with 263 Summer St., “but in the end, we felt it was the right thing to do for our investors.” The internal rate of return was stratospheric, he concurs, and it sets up the fund for future successes. Paradigm just purchased a three-building, 407,000-sf warehouse complex in southern New Jersey on behalf of the fund for $17 million, and is eyeing several other deals as well.
Among the more uniquely shaped properties in the city, the triangular 263 Summer St. has a prominent location at the entrance to the Fort Point Channel and the emerging Seaport District. Dating to 1910, the building was once part of Boston's chief manufacturing district, but the area has emerged in the past quarter-century as a fringe office destination. As with the bulk of the district, the building was owned by Boston Wharf Co. for decades until that firm began an eight-year program of divestment that has now transferred all the holdings to a variety of new investors.
Among the firms buying a piece of that portfolio was the Archon Group, which acquired 17 buildings including 263 Summer St. in November 2005. The company later teamed up with developer Tony Goldman and announced a bold plan for converting the district into a mix of housing, office and retail space. In light of Boston's suddenly vibrant office market, however, the mixed-use concepts are being quickly abandoned and sold to a new wave of developers. Normandy Real Estate Partners and Aegean Capital are among the latest arrivals, with each buying former Archon-owned assets this year.
National Development also made a big splash to begin 2007 by securing four Fort Point Channel properties from Berkeley Investments. Those assets were also Boston Wharf Co. properties that Berkeley acquired as part of a 12-building portfolio sale. Locally based Berkeley is now pursuing redevelopment of its remaining holdings. National paid $75 million for the four properties, which encompass 330,000 sf. Calls to the company to discuss its latest investment were not returned by press deadline. Sources further claim that Richards Barry Joyce & Partners has been hired as leasing agents for 263 Summer St., but calls to RBJ were also not returned. The firm was previously hired to lease the other Fort Point Channel buildings acquired by National.
One intriguing tie to the past is a large neon sign on top of 263 Summer St. that displays the Boston Wharf Co. logo. While the firm has disappeared from the local landscape, Archon restored and relit the sign, and now leases it from the building's owners.
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