tower properties General Motors Building
[IMGCAP(2)]Boston Properties says it expects to complete the acquisition of 125 W. 55th St. "shortly," through a joint venture in which the firm will own a 60% interest. The purchase price for that property is approximately $444 million, including the "assumption of an aggregate principal amount of $263.5 million of secured and mezzanine loans having a weighted-average fixed-interest rate of 6.31% per annum," all of which mature in March 2010.
Each of the two acquisitions--the 664,000-sf Two Grand Central Tower at 44th Street between Lexington and Third avenues, and the 292,000-sf 540 Madison Ave. building at Madison Avenue and 55th Street—-were completed through a joint venture among Boston Properties, US Real Estate Opportunities I LP--which is a partnership managed by Goldman Sachs--and Meraas Capital LLC, a Dubai-based private equity firm. Boston Properties has a 60% interest in each venture and will provide customary property management and leasing services for the venture. According to a company press release, Boston Properties expects to account for its investment in each JV under the equity method of accounting rather than on a consolidated basis. The Boston-based firm did not respond to GlobeSt.com queries by deadline.
The debt that was assumed as part of the transactions consists of the following: 540 Madison Ave.--two secured loans having an aggregate principal amount of $119.9 million and a weighted-average fixed interest rate of 5.2% per annum, each of which matures in July 2013; and Two Grand Central Tower--a $190 million secured loan having a fixed per annum interest rate of 5.1%, which matures in July 2010.
According to the company's "Projected 2008 and 2009 Returns on Acquisitions" table, the firm projects its share of the 2009 unleveraged cash return, including fee income, from the 39-story 540 Madison Ave., the 44-story Two Grand Central Tower and the 23-story 591,000-rentable-sf 125 W. 55th St. to be approximately 5.8%; and its share of the properties' 2009 unleveraged FFO return, including fee income, to be approximately 7.3% to 7.6%. The company does note that those projections are "based on current information and assumptions regarding these properties," but it says that actual results may differ.
Goldman Sachs and Morgan Stanley are Boston Properties' financial advisors, as well as Lehman Brothers and Deutsche Bank. Proskauer Rose LLP and Goodwin Procter LLP are giving the Boston-based REIT legal assistance. Goodwin Procter partners Mark Kirshenbaum, Edward Glazer and Ettore Santucci are advising on the tax and structuring issues related to the transaction.
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
