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BOSTON-Continuing to restock its regional portfolio, Philadelphia-based BPG Ltd. has agreed to buy 18 Tremont St., a 12-story, 202,000-sf office building being divested by Meritage Properties. The asset is trading at a price approaching $50 million, according to sources, a level equating to $247 per sf. Even if that mark is not attained, sources say the figure will be substantially above the $185 per sf paid by Meritage in May 2005 when 18 Tremont St. fetched $37.5 million.

“It is under contract,” acknowledges one source, with a closing anticipated by mid-October. BPG officials and brokers at Jones Lang LaSalle did not respond to inquiries from GlobeSt.com, while Meritage founder Andrew Nathan declined comment on the matter. Nonetheless, sources insist that BPG has committed to the property, with the negotiations apparently surviving a jittery commercial real estate sales market. Both domestic and foreign bidders were said to have pursued the opportunity, lured by a combination of the building’s leasing prospects and a prime location near Government Center, Boston Common and the vibrant Downtown Crossing retail district.

Meritage might appear to be wringing substantial profit in the sale, but observers predict BPG will also see upside. Not only did Meritage invest several million dollars fixing up the building’s common areas, facade and retail to help boost leasing prospects, the deal is occurring at a time when Boston’s office space is surging upwards, even for class B space. When 18 Tremont St. initially went on the sales block in June, a GlobeSt.com article cited marketing materials putting the in-place rent at $27.77 per sf, several dollars below the average asking rate of $34.47 in JLL’s mid-year review. In JLL’s just-issued third-quarter report, the figure is up to $39.64. Encompassing 20.6 million sf with a vacancy rate of 11.4%, Boston’s class B market is seen benefiting from firms trying to escape even greater rent accretion at the class A level. JLL puts the average rate for that inventory at $65.61 per sf.

High-end class B assets such as 18 Tremont St. should be in a particularly good position as companies seek to maintain a measure of quality even while stepping down a peg, observers indicate. “It will get tons of traffic,” predicts one broker familiar with the building and also with BPG, which owns one other Downtown Boston property, the 52,000-sf 60 Temple Place several blocks south. BPG is “a great landlord,” says the broker. “They follow through every time.” BPG has sold several of its Boston-area properties in recent years, but earlier this month paid $63 million to acquire the Westborough Office Park in suburban Boston’s MetroWest market. The firm also owns office parks in Woburn and Tewksbury.

Comparatively speaking, BPG would also seem to be getting a bargain on a per-sf basis for 18 Tremont St. Other nearby class B buildings are trading at record prices, with 45 Milk St. approaching $500 per sf in its recent sale and another 12-story class B building just blocks from 18 Tremont St. reaping nearly $350 per sf when acquired recently by Irish investors. Another Irish firm, Synergy Financial LLC, just paid $333 per sf for 141 Tremont St. That building was sold by the Flatley Co., the same firm which owned 18 Tremont St. prior to Meritage’s purchase.

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