X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

[IMGCAP(1)]NEW YORK CITY-Boston Properties Inc. has completed the acquisitions of 540 Madison Ave. and Two Grand Central Tower here for approximately $705 million including $309.9 million of “assumed indebtedness,” according to a company press release. As GlobeSt.com previously reported, the purchase of the two tower properties from affiliates of Macklowe Properties, was part of a nearly $4-billion portfolio buy, which also included the purchase of the General Motors Building, and a 591,000-sf office building at 125 W. 55th St.

[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.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 3 free articles* across the ALM subscription network every 30 days
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.