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Related Beal Pegged as Citgo Sign BU Portfolio Winner

July 20, 2016 - By Joe Clements

BOSTON—A Kenmore Square building that serves as home to the famous Citgo sign is among nine Kenmore Square properties being acquired by hometown firm Related Beal, market sources are telling therealreporter. An exclusive of Newmark, the listing involves properties that have been in the ownership of Boston University for decades and could yield in excess of $145 million.

The school after aggressively buying up real estate in and around its main campus beginning in the 1970s and 1980s has recently been paring those assets, including the Hotel Commonwealth which BU developed and more recently, a three-story office building across the street from the Newmark assemblage that includes 648 Beacon St. and 660 Beacon St. (home of the sign) plus 541 Commonwealth Ave. and 11-19 Deerfield St.

“They have,” responds one informed CRE professional when asked of Related Beal being selected after a hotly contested competition among both national and local investors. Another source says the process has not been finalized, but concurs Related Beal is the school’s designated choice and relays that the two sides are working to formalize the commitment.

Upon Newmark being tabbed as BU’s agent earlier this year, the properties were characterized as a development play by many market watchers versus a simple investment of real estate with several prominent tenants located in one of New England’s most recognized business districts. The area serves famously as home to both the Citgo advertisement and the venue that made it a national icon—Fenway Park. Indeed, the sign which celebrated 50 years at 660 Beacon St. in 2015 has become so revered that news of the pending real estate trade which was first broken by the school’s newspaper ignited a movement to designate it as a registered landmark. That lit off a series of articles in various news outlets, some musing whether it would impact investor appetite to buy the assets or knock pricing down.

Not so much, insists one market watcher, who calls the matter “negligible” on any level, and others maintain it may have served to heighten its cachet. If so, that is good news for Newmark’s client, with BU President Robert Brown explaining in a statement sale proceeds will be used to invest in its “core missions” of education, research and student services

At this juncture, the parties involved are keeping the matter under wraps, with calls to Newmark Capital Markets not returned by press deadline. The group is led by US Head of Investments Robert E. Griffiin Jr., Edward C. Maher Jr. and Matthew E. Pullen. Newmark’s multifamily team is also playing a major role in the exclusive due to its residential possibilities; Executive Managing Director Michael J. Byrne oversees that practice group whose members include Thomas Greeley and Casey Griffin. Regardless of the radio silence, multiple sources peg Related Beal as the victorious suitor and say there was a three-way race to the finish line won by a company which has already transformed or is in the process of doing so major parts of the city, including so-called gateway projects such as the new Converse headquarters at the Leonard Zakim Bridge or the former Fidelity block in the Financial District. Having such a player taking on the properties would increase the likelihood of a redevelopment, several industry experts suggest. “I’d say so,” replies one market veteran among those opining the Citgo sign will not be an obstacle to increasing the footprint of approximately 335,000 sf.

The portfolio does offer a measure of in-place cash flow, with Barnes & Noble at BU in 660 Beacon St. while other retail tenants include Bertucci’s Restaurant and Cornwall’s Pub. On pricing, multiple sources put the figure over $145 million and possibly approaching $150 million. “It’s in that zone,” says one professional who is familiar with the properties.