TIAA Acquires Seven Property Portfolio in Fort Point Channel

374 Congress St.

BOSTON— Clarion Partners has sold a more than 400,000-square-foot office portfolio in the Fort Point Channel section in the Seaport District for $224 million. New York City-based financial services and investment firm TIAA acquired the seven buildings on Summer, Congress and Farnsworth streets in an all cash transaction. Brokerage firm Holliday Fenoglio Fowler ‘s senior managing director Coleman Benedict and director Ben Sayles exclusively represented the seller, a separate account advised by Clarion Partners , and procured the buyer, an affiliate of TIAA . The transaction includes six office properties and one parking lot. The portfolio originally built in the early 1900s is located at 263 Summer St.; 332 and 374 Congress St.; and 33-41, 34, 38 and 44 Farnsworth St. and is 97% leased. Clarion acquired the seven building portfolio from a joint venture of Angelo, Gordon & Co. and National Development for approximately $129 million in late 2012. Many of the office properties also feature ground floor retail space. “This particular transaction underscores the unmatched strength and desirability of the Boston market,” HFF’s Sayles tells Globest.com. “We are seeing an influx of new investors seeking to plant their flag in this gateway market as well as established players with substantial portfolios augmenting their existing holdings.” Sayles says that Clarion created significant value for the portfolio with a significant capital improvement program, followed by conversion of some first floor office space to retail, which generally commands higher rents and an aggressive leasing program. TIAA, one of the largest stakeholders in real estate equity and debt holdings in the Boston area, owns a number of trophy assets in the city including One Boston Place, 33 Arch St., 501 Boylston St., 40 Broad St. and 51 Sleeper St ., which the firm acquired in late 2013 for what was at the time a record price in the Seaport District for office space. “We strongly believe in the city, it’s continued strength and the long-term viability of real estate investments here, which we are actively continuing to seek across asset and risk classes. This portfolio allows us to diversify our current holdings and provides for creative value enhancement moving forward,” says Sam Flood , head of Northeast real estate acquisitions, TIAA Global Asset Management. He tells Globest.com the firm is in the early stages of investigating the scope of additional development that can be undertaken at the newly acquired properties. Flood says that TIAA was attracted to the portfolio because it is a significant part of the estimated 3.9 million square feet of highly sought after commercial space in the Fort Point market. “We are buying it (the portfolio) at $550-a-square-foot with rents around $50,” he says. “We are seeing 101 Seaport sell at $1,050-a-foot and the gross rents there are $70 to $75-a-square-foot so we feel as a value play it is very attractive.” He notes that the portfolio consists primarily of collaborative type space that is very popular with creative tech and media firms. He expects the demand to continue to be robust for the limited supply of office space in the Fort Point neighborhood from these sectors as well as from businesses that support GE, Goodwin Procter and PwC operations there. “There are a number of value plays you can do in the portfolio as well, for example, the ground floor retail you can move that around a little bit and re-engage it a little bit more than it is currently,” Flood says. “There are some other opportunities including building on some of the buildings that we are looking at as well. In a nutshell that is why we love it.”