Oxford Nabs Downtown Building for $115M

BOSTON—Toronto-based Oxford Properties Group, which made a big splash in the Boston-area office market last year with a four-building portfolio purchase, has increased its downtown holdings with the $114.5-million acquisition of the 745 Atlantic Ave. office building here.

Oxford Properties acquired the 11-story 174,000-square-foot office property from Beacon Capital Partners. The building consists of 166,000 square feet of office space and 8,000 square feet of retail.

The building was extensively renovated in 2013-2014. The capital program included a newly designed lobby area and improvements to the external façade, common areas and a revenue generating 152 stall-parking garage. The property is currently 100% leased to four tenants including WeWork, a provider of shared office space to start-ups, and Cambridge Consultants, a global product development and technology-consulting firm.

Oxford, which opened its Boston office in September 2014, now owns and manages four assets in downtown Boston and one in Cambridge, MA totaling approximately 2.9 million square feet and valued at nearly $2 billion. In May 2014 Oxford announced it was entering the Boston market with its agreement to acquire 125 Summer St. and 100 High St. and with partner JP Morgan Chase & Co. on the purchase of 60 State St., 225 Franklin St. in Boston and One Memorial Drive in Cambridge, MA. In September 2014 those transactions closed with the exception of the purchase of the 28-story 546,336-square-foot 100 High St. office building. Oxford sold its rights to acquire that property to a fund sponsored by CBRE Global Investors of Los Angeles, according to Chad Remis, city head of Oxford's Boston platform.

Commenting on its most recent purchase, Remis says, “745 Atlantic Ave. typifies the assets Oxford wants to own. It's high quality, boutique offering perfectly aligns with one of our key investment strategies to acquire and develop Class A offices located in and around major transportation nodes.”

Remis says the building's location in the Boston CBD was very attractive as was the fact that the building is fully occupied and most recently benefitted from a significant capital improvement program and repositioning by Beacon Capital.

He adds, “The transaction underscores our commitment to the Boston market, where we have become a significant landlord in less than a year of entering the city. Our local presence is not only key in Oxford being able to secure such first-rate assets as 745 Atlantic Ave., but it's also crucial to creating value for our partners via the strength of our on-the-ground asset and property management expertise.”

The bidding for the property was intense, Remis notes. JLL handled the marketing of the property for Beacon Capital.

The building is fully occupied and has a weighted average lease term of approximately 13 years and has very little lease rollover in the near term. “It is a very long-term occupied building that has very minimal, but moderate rent escalations through the terms of those leases,” he says.

Oxford, which has grown its presence in Boston to 46 employees, is bullish on Boston due to its strong and improving fundamentals, and particularly its strong educational and technological sectors that include MIT and 50 other higher educational institutions in the region as well as more than 5,000 high tech and 480 biotech firms.

Remis says that Oxford does not have any further office product in Boston in its acquisition pipeline but stresses that the firm is in its “early innings” of what it projects to be a long-term presence in the city. He adds that in the future the company expects to expand its presence in the Boston market.