Brickstone Square Puts KS CRE Run Near $100M

ANDOVER — Joining equity partner Oaktree Capital in their inaugural venture, $59.5 million spent on 1.04 million sf here at Brickstone Square caps a late-summer surge by KS Partners in three separate office deals nearing $100 million total that bring the Woburn-based firm a bestin- class Route 128 mainstay in Dedham (see story, page seven) and a fully leased property across from TD Bank North Garden dripping with future upside. Yet even after that frenetic stretch, KS principal Robert Hawkins tells Real Reporter this week the group led by Kambiz Shahbazi is trolling for more square footage as the final quarter of 2014 commences. “

We are chasing deals from Hartford and I-495 into Route 128 and downtown (Boston) as hard as we can,” says Hawkins, whose firm began 2014 harvesting a long-held retail gem in Cambridge’s Porter Square at a price exceeding $655 per sf ($36 million). All along, however, the focus has been to grow its New England portfolio, Hawkins explains, with KS Partners and hedge fund giant Baupost Group a whisker away from reeling in Crosspoint, the landmark Lowell complex that fetched $100 million on its own earlier this summer.

Reviewing the three recent deals KS has triumphed on, Hawkins cites diverse reasons for arduously entering pitched battles mandated to win each in a period of stiff competition against capital streaming into metropolitan Boston. “Brickstone Square received a terrific response from the marketplace,” HFF Director Benjamin Sayles relays after that firm’s brokerage team successfully peddled the three-building complex for Pearlmark Real Estate Partners. “In the end, Oaktree and KS put forth the most compelling proposal and they delivered as promised,” Sayles continues, calling the resulting negotiations between both sides “smooth from start to finish.” Also overseeing that blockbuster transaction was HFF Senior Managing Director Coleman Benedict.

Even with the glass two-thirds full, Brickstone Square does have a significant amount of space to fill, but Hawkins argues that presents more an opportunity than a crisis in a climate favoring firstclass settings for rents well below those just to the south along Route 128. “We like the basis and the size of the property, and we are excited to have a new capital partner who recognizes the great potential we see in it,” Hawkins says. “It feels like that market is getting better every day, and I think we will benefit from the uptick in rents in those other markets.” To further ensure that goal, CBRE/NE has been named exclusive leasing agent, reports Hawkins, with the team including Jason Levendusky, Andrew Majewski and Kerry Olson.

While Brickstone’s sticker price seems imposing on paper, Hawkins notes the $60 per sf is well below levels of $100 per sf and more needed to land similar product and says it gives enough wiggle room to spend a projected $5 million to $7 million completing the Pearlmark revitalization program that had brought several substantial tenants to the park during its nine-year tenure amidst the harsh recession where vacancies topping 30 percent were the norm. Brickstone Square “has proven to withstand the test of time,” Sayles relays, adding he believes there are reasons others looked beyond the empty product. “Brickstone Square is one of the best selfcontained campuses located north of Boston,” he declares, a 25.5-acre property that “embodies the live, work, play environment that many assets aspire to” with onsite day care, 564-seat cafeteria, health club and structured parking among the strong suits, and KS Partners is intending to enhance the campus concept even more, Hawkins pledges. A $54.5 million loan from JP Morgan Chase Bank was secured to help fund the endeavor.

The Real Reporter initially unveiled KS Partners and Oaktree Capital had been named winning bidders on Brickstone Square on July 31st, but in that case and other deals, including their $7 million acquisition of 141 Portland St. in Boston’s North Station, KS officials were unable to discuss those deals prior to closing due to confidentiality agreements in place. The same was the case for HFF, which had not responded to inquiries in the earlier article detailing the winning bidder in Andover, and had also remained mum on another matter—its listing of 3 Allied Dr. that was separately marketed on behalf of Normandy Real Estate Partners. A press release was issued in the wake of that $31 million investment which bolsters the KS footprint on Route 128, complementing its 180,000-sf Dedham Executive Park at Routes 1A and 128 which has been a rival of 3 Allied Dr. prior to joining the KS fiefdom.

In the North Station agreement, which Cassidy Turley brokered on behalf of seller Synergy Investments and also procured KS Partners, Hawkins explains the deal not only broadens its holdings in that district given its existing 225 Friend St. asset a few doors away, but gives near-term upside in being 100 percent leased to three prized tenants, including Delaware North administration whose three-year deal would expire about the time owner Jeremy Jacobs opens his massive mixeduse complex across the street in front of TD Garden, a happening Hawkins is betting will combine with more than $1 billion in private development underway to make 141 Portland St.’s availabilities a popular item. “It is a very dynamic submarket that is only going to get better,” he says. “We feel we are well-positioned to capture some of that upside at the right time.” That agreement as outlined in the Aug. 11th Real Reporter involved Cassidy Turley Executive Managing Director David J. Pergola, Brian Doherty, Colleen Carey and Jenna Skaar.

As for Oaktree Capital, one of several equity groups KS Partners has been helping find prescient opportunities in the ever-evolving New England CRE landscape, Hawkins says there are no followup prospects on the dais, but not for a lack of trying. “They have been excellent partners in our first deal, and we would clearly love to present more in the future,” he says. “We are out there every day looking, and hope the right one comes along that makes sense for them.”