BentallGreenOak Boston MOB Brings $47M+ as German Buyer Lands Asset Via Newmark

March 26, 2021 - By Joe Clements

147 Milk St., Boston MA

BOSTON — Nationally known Investment advisory firm BentallGreenOak has been around Boston’s commercial blocks more than a few times over the past decade making substantial deals involving everything from office buildings to parking garages—and sometimes both—but the unique $47.9 million trade of a Financial District MOB through Newmark is getting particular attention less than five years after its $33.2 million purchase in June 2016.

“BentallGreenOak should be commended for their creativity and commitment to securing a long-term, win-win renewal with their tenant, an extension which set this asset up for a truly exceptional outcome,” Newmark Senior Managing Director Michael Greeley tells Real Reporter in acknowledging the brokerage shop’s role as exclusive agent in today’s purchase of 147 Milk St. by a German investor-backed with $14.7 million of Rhineland debt.

A leading member of Newmark’s Medical-Academic specialty unit, Greeley is referring to a 14-year commitment by Atrius Health/Harvard Vanguard whose “landlord-friendly” renewal in 2020 features a triple-net structure with annual rent escalations of 2.8 percent which the tenant eagerly accepted to retain a location where it has been for 35 years as an independent multi-disciplined medical group now billed as the region’s largest.

“It is a great case study in MOB asset management,” recounts Greeley, part of the Newmark specialty CRE unit founded by Executive VP Frank Nelson, both of them on the 147 Milk St. assignment with US Co-Head of Capital Markets Robert E. Griffin Jr. and Executive VP James M. Tribble.

Newmark advised BGO and conducted a global marketing campaign that fomented “a collision of core capital” drawing international players who were outdueled by KanAm Grand America LP, a German-based fund operating out of Atlanta making its first entry into Massachusetts. Its financier, Bayerische Landesbank, is familiar with the landscape, one loan being a $90.4 million mortgage in 2008 backing the purchase of nearby 200 State St. barely two blocks east of 147 Milk St.

Citing confidentiality agreements, Greeley declined to discuss particulars of the sale including confirmation of the victorious suitor or leveraging information but does offer that “we were pleased to facilitate a new entrant to the Boston market, a core overseas investor who was attracted to this trophy asset for its long-term lease” plus Newmark analysis showing that “Boston has surprisingly few urban medical office buildings that are owned by third-party investors, making 147 Milk Street even more desirable.”

Greeley does back accounts by CRE observers who maintain the building had numerous prospects lined up to pay the freight that equates to an eye-popping $915 per sf. That compares to the $634 per sf spent by BGO when the two firms were doing business in the Hub as separate entities prior to their merger as a major powerhouse in New England and beyond.

The stability of 147 Milk St. created by BGO was further enhanced by pandemic pandemonium which has unsettled many CRE investment strategies, according to market watchers, and Greeley concurs the “usual suspects” for MOB faced a growing field of competitors. “The process was a collision of core capital, with the country’s most aggressive medical office buyers competing with net-lease investors, overseas capital and institutional money that otherwise would be slated for downtown office product,” says Greeley, adding, “147 Milk demonstrates the market’s fervent appetite for recession-resistant medical office buildings.”

Both Bentall—which did the 2016 Milk Street deal—and GreenOak proved quite adept at sniffing out emerging trends in Boston prior to their ultimate merger into the current advisory powerhouse, with each operation cementing high-profile investments such as GreenOak joining forces with the likes of Synergy Investments to buy such assets as a four-building, 237,000-sf package of older office buildings near Milk Street that fetched $90 million from Westbrook Partners in early 2016 after being acquired four years earlier for an aggregate $56 million just before the Class B office sector became a popular target among investors. Ten Post Office Sq. which abuts Milk Street, is an imposing 445,000-sf office building bought in 2014 for $143 million by Synergy and GreenOak who also later spent $365 million for another landmark office asset, Center Plaza in Boston’s Government Center.

On top of landing 147 Milk St. during the booming mid-2010s, Bentall also got ahead of the Seaport District surge, among its notable purchases being 300 A St., a former warehouse converted fo first class office product acquired for $54.6 million in January 2014 that reaped $70.4 million two years ago next week. In January 2015, the group paid $56 million for a parking garage at 10 Necco St. that fetched $81 million in March 2019. Bentall also spent $86.5 million in Oct. 2015 for 22 Boston Wharf Rd., a mixed-use building featuring a multi-level parking garage that had two levels of first-class office space grafted onto its top.