Invesco Wins 40 Broad St. at $150M to TIAA CREF Via Eastdil

BOSTON—One of the city’s largest Class B office buildings, 40 Broad St., is being sold by Teachers Insurance and Annuity Association to Invesco Real Estate in a deal being negotiated by Eastdil Secured’s Capital Markets group. Market sources peg pricing for the 291,000-sf structure above $150 million, which would put it in the $515 per sf range if that figure is attained. The pension fund giant paid $110.0 million in May 2013, or $378 per sf., to purchase the 11-story structure that is located steps from Faneuil Hall Marketplace and the Rose Fitzgerald Kennedy Greenway.

“Yes,” one industry source tells therealreporter.com in response to inquiries regarding whether Invesco has won a spirited competition for the building which is unusually large for its class and boasts several high-end tenants, including Mullen Advertising. While traditionally focused on core assets, the building’s lengthy track record outperforming the Class B average fundamentals was enough to make what appears to have been a lucrative decision. TIAA made a similar play that December in acquiring the aging 51 Sleeper St. in Boston’s booming Seaport District. TIAA paid $60.2 million—the $400-per-sf price tag raising a few eyebrows at the time—yet several assets that do not have the property’s presence along the Northern Avenue corridor have fetched well over that amount as the Seaport continues to thrive.

Invesco is a well-known name in Boston real estate circles, and the operation appears to be increasing its platform regionally, as evidenced in a Real Reporter article this month unveiling its agreement to buy the Ames Hotel at 1-15 Court St., a boutique operation just blocks from 40 Broad St. that Invesco is reportedly buying for $55 million, or about $482,000 per key. In the spring, as relayed in another Real Reporter exclusive, Invesco paid $185.5 million for 10 buildings in the Hub’s Seaport District, also Class B real estate with a pedigree anchor, Thomson Financial Corp. Similarly, Mullen’s arrival in 2009 exemplifies the popularity of the enduring structure that dates to 1923.

Eastdil’s Capital Markets team is wrapping up a monumental season in which it participated in two of the country’s biggest transactions of the decade, both involving Blackstone Real Estate Partners which reaped $1.3 billion in divesting a pair of Class A Back Bay towers purchased by Oxford Capital and its landmark acquisition of life sciences REIT BioMed, an industry behemoth which has millions of square feet in Boston and Cambridge.

On the “smaller” scale, in deals previously unveiled by Real Reporter, Rockpoint Group is buying 99 Summer St. from Cornerstone Real Estate Advisers for approximately $130 million and that same investor previously this year acquired the Renaissance Boston Waterfront Hotel in the Seaport District, that trade eclipsing $157 million. At North Station, H.N. Gorin is selling a major share of its 101 Merrimac St. office tower to Artemis Capital for a figure estimated above $101 million.

Eastdil Capital Markets members did not respond to phone calls regarding the 40 Broad St. listing. The group includes Brian Barnett, Peter Joseph, Sarah Lagosh, James McCaffrey, Molly Padien-Havens and Steffan Panzone.
The timing certainly seems ripe for Invesco considering impressive metrics for Class B space as shown in JLL’s third-quarter survey that puts net absorption for that segment above one million sf without the final frame included. The direct vacancy rate for 60.1 million sf is down to 13.6 percent versus 16.6 percent in the first quarter of 2013. Asking rents surged 10.6 percent last year and are up 5.8 percent presently to $26.31 per sf compared to $23.03 per sf in Q1 2013.