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Mon, Dec 17
A Compendium of Property & Capital News
Dec 17
A Compendium of Property & Capital News

Marwick Seen Selling Jumbo, Guggenheim Two Boston Office Buildings for $23M+

October 17, 2017 — By Joe Clements
12 Post Office Square | Ten Liberty Square Boston

BOSTON—Guggenheim Partners and Jumbo Capital Management are literally beside themselves in growing a nascent Financial District office portfolio here, or so it would appear via reports the investors are buying two conjoined Class B buildings abutting 50 Congress St., the landmark mid-rise that was their inaugural Hub conquest this spring, its 179,000 sf purchased for $79 million from KBS through HFF. Principal Life Insurance Co. loaned $42 million for 50 Congress St. and will provide debt on 12 Post Office Sq. and Ten Liberty Sq., sources maintain, those assets expected to reap seller Marwick Associates over $23 million.

“It’s the same cast of characters,” one CRE contact agrees when asked of the 50 Congress St. stewards being the team now targeting 56,000 sf total in structures whose roots date to the 1870s and early 1900s. Led by founder Drake G. Behrakis, Marwick Associates paid $9.4 million a dozen years ago next week for the buildings which are being traded at or near 100 percent occupancy, according to another industry professional also familiar with the negotiations.Twelve Post Office Sq., which alternatively goes by 60 Congress St., looks out over the lush Norman B. Leventhal Park at Post Office Square, the building’s construction occurring in the early 20th century.

Fronting Liberty Square on the other end of the linear block it shares with 12 Post Office Sq., 10 Liberty Sq. dates back to 1874, rising from the ashes of Boston’s Great Fire of 1872. A two-story addition was later grafted atop the building that now stands at six stories. Designed using a Gothic Revival style by Sturgis & Brigham Architects, it is listed on the National Register of Historic Places and has another address as well, 55 Kilby St.

JCM principals declined to comment on the pending purchases when contacted by Real Reporter, leaving unanswered questions including whether a broker is assisting Marwick Associates in harvesting the buildings that were previously owned by Boston University. Observers speculate Guggenheim and JCM were willing to pay above $420 per sf for a variety of reasons, including assembling a critical mass of space in a confined area between 50 Congress St. and the new holdings, plus they are expected to benefit as below-market leases begin to roll at a time when Class B rates are at historic highs.

Founded in 2009, JCM is led by principals Jay O. Hirsh and Howard Hirsh, and prior to 2017 the group had created a vast metro Boston portfolio of suburban product eclipsing two million sf where over $200 million was infused to secure such properties as 3 Riverside Dr. Andover, 100 Crosby Dr. in Bedford, One Commercial St. in Sharon and 1900 Crown Colony Dr. in Quincy, the first-class office building that now serves as company headquarters for a staff now standing 30 strong. Guggenheim’s real estate division is an offshoot of global investment advisor Guggenheim Partners and oversees $1.5 billion of assets encompassing 9.1 million sf.

Real Reporter was first to unveil the 50 Congress St. investment that HFF orchestrated via its team of Senior Managing Director Coleman Benedict, Managing Director Christopher Phaneuf and Senior Director Christopher Phaneuf. The latest purchases are being done directly with Marwick, some claim, but HFF is again reportedly arranging the debt package through Principal Life, that assignment in the 50 Congress St. situation handled by Senior Director Lauren O’Neil Goff.

The pending buys show “they are very bullish on that downtown submarket,” one source says of 12 Post Office Sq. and 10 Liberty Sq., and the properties are expected to undergo a series of capital improvements to take advantage of a predilection for historic brick-and-beam product similar to 50 Congress St., which was finished in 1915. Interestingly, the Class B sector has come more in favor downtown among new age companies that view space in such modern towers as Exchange Place right next door on the other side of 50 Congress St.

Guggenheim/Jumbo “think they will capitalize on rising rents in class B office when near-term tenants roll, and they like what is happening around them,” says the industry veteran who points to a mixed-use repositioning of the former Fidelity Investments headquarters across the street from 50 Congress St./12 Post Office Sq., and another announcement this month that the One Post Office Sq. tower is undergoing its own massive makeover, encouraging news for a district that had struggled after the 2008 recession. “It’s all good now,” says the source tracking downtown’s recent progress who opines “the timing is great” for Guggenheim and JCM to double down on the venue.

Lauren O'Neil Goff
Sr. Director, HFF