Tech Firm Buys 760K-SF Complex from Harvard

WATERTOWN, MA-In what is reportedly the Boston market's largest user-buyer CRE deal thus far in 2013, athenahealth Inc. has closed on its acquisition of the 11-building Arsenal on the Charles complex here. The provider of electronic record and billing systems to the healthcare sector paid $168.5 million to acquire the 760,000-square-foot complex from Harvard University in a deal originally announced this past December.

athenahealth originally moved into the Arsenal with a 133,000-square-foot headquarters space in 2005. It had become the largest tenant there at 250,000 square feet before agreeing to buy it from Harvard, which in turn had paid $162.6 million from O'Neill Properties Group in 2001, originally with the intent of redeveloping it for university use. The complex's new owners are looking to expand to as much as 500,000 square feet there.

The complex, managed by the Beal Cos., began life as the Watertown Arsenal, which in 1816 began manufacturing cannon for US Navy ships. For nearly two centuries, it served as a US Army arsenal, then was redeveloped as a spec office complex.

"The Arsenal on the Charles offers athenahealth everything we could ask for in a headquarters; its open and expansive architecture, outdoor campus feel, strong community and proximity to Boston fit with our culture, strengthen our standing as a top employer and provide an inspirational backdrop as we work to be medical caregivers' most trusted service,” Jonathan Bush, the company's chair and CEO, says in a release. “We are building a national health information backbone that will have a revolutionary impact on the cost and quality of healthcare. I can imagine no better place than the very same buildings from which the first industrial revolution rose, to take on such inspiring and important work.”

This past October, Bush told the Boston Business Journal had he had narrowed down possible locations for athenahealth headquarters to three. Among them were expanding in Watertown, moving to the unbuilt New Balance complex in Brighton, MA, or leasing space at the Landmark Center near Fenway Park when Blue Cross Blue Shield of Massachusetts vacated. Bush said in October that the final decision “all depends on pricing.”

The company worked with Avison Young on its two-year search for headquarters space that provided room to expand. The complex that holds its existing space turned out to provide a long-term solution on a much lower overall-cost basis, according to AY.

Boston-based Steve Cook and Chicago-based Suzanne Martinez, both AY principals, negotiated on behalf of athenahealth. The university represented itself in the deal.

To finance the purchase of the 29-acre Arsenal complex and to refinance existing debt, athenahealth says it entered into a new $325-million senior credit facility, with a term of five years, comprised of a $200-million unsecured term loan facility and a $125-million unsecured revolving credit facility to refinance existing indebtedness. Bank of America Merrill Lynch and TD Bank acted as joint lead arrangers and joint book managers for the credit facility. Other lenders on the facility include Fifth Third Bank, US Bank, Sovereign Bank and RBS Citizens.

Occupancy at the Arsenal on the Charles is currently more than 90%. In addition to athenahealth, other major tenants at the complex include Harvard Business School Publishing with 100,000 square feet, Bright Horizons at 90,000 square feet and Boston Sports Clubs in a 50,000-square-foot space.