Gerding Edlen Divests Factory 63 Apartments in 38-Unit Sale Via Newmark to Jones Street
January 16, 2017 - By Joe Clements
BOSTON—It appears 2016’s holiday season was not enough to sate the appetite of Jones Street Investment Partners, the homegrown Hingham firm that paid $13.5 million on Friday for Factory 63, a one-time industrial building converted to 38 apartments by Gerding Edlen. Funded by a $9.5 million loan from Bank of New England, JSIP’s purchase comes less than a month after separately spending $64.7 million on a 300-unit multifamily community in Franklin, that asset acquired from Berkshire Group in a JLL-listed assignment.
JSIP’s freshest holding involves a renovation receiving widespread media attention thanks to a predominance of micro-units in the five-story building at 63 Melcher St., apartments averaging a mere 600 sf. Ensconced in the Seaport’s Fort Point Channel, 63 Melcher St. is steps from the new headquarters of General Electric Corp. and a five-minute walk in either direction to the Boston Convention & Exhibition Center and South Station transportation hub.
Newmark’s Capital Markets division advised Gerding Edlen on the sale of a property constructed in conjunction with the client’s luxury 315 on A Street apartments around the corner. The multifamily practice group is led by Executive Managing Director Michael Byrne and US Head of Capital Markets Robert E. Griffin Jr. with other practice group members including Managing Director Thomas D. Greeley and Associate Casey Griffin.
Factory 63 “was very popular among a lot of private capital groups,” Greeley remarks in acknowledging Newmark’s role helping Gerding Edlen harvest the project whose transfer was complicated by such elements as having historic tax credits in the capital stack, aspects pushing the conclusion of its exchange into 2017. “We were fortunate to have a very patient seller and a cooperative buyer who each worked really hard to get it done,” says Greeley. JSIP 63 Melcher LLC is the entity taking on the property Gerding Edlen secured in September 2011 for a mere $2.5 million, then set about realizing a pioneering repositioning that appears to be paying dividends in robust occupancy and praise among civic leaders for serving a community need for moderate rate housing.
Well known in the western US, Gerding Edlen was a newcomer to Greater Boston this decade whose leadership quickly embraced a Seaport District that was only then beginning to blossom after decades of ups and downs. The 63 Melcher St. purchase six years ago was made from Archon Group, that company an even earlier adherent of Fort Point Channel where it was a major buyer of the vast portfolio held for over a century by Boston Wharf Co. Besides Factory 63, Gerding Edlen in 2015 parted ways with 315 on A Street, the 202-unit project which was bought by Equity Residential for $130 million. It was harvested by CBRE/NE’s team led by Simon J. Butler and Biria St. John.
More recently, Gerding Edlen swapped sides when CBRE/NE orchestrated the $89.5 million trade of Neponset Landing in Quincy to the firm on behalf of client Northwestern Mutual Real Estate, a deal first unveiled in mid-December by Real Reporter. The 280-unit building came on line in 2007, the same year Northwestern paid $75.6 million to secure the 12-story structure. Prior to that, development had been the company’s focus in metropolitan Boston, with other successful ventures in East Boston and the South End.
Founded by market veteran Matthew Frazier, JSIP is an active participant on the multifamily front, as evidenced in the Franklin commitment which cost $216,000 per unit, the Union Place apartments at 10 Independence Way contained in 10 mid-rise buildings complemented by a clubhouse, fitness center and elaborate pool with an outdoor kitchen and pool. The 410,000-sf development completed in 2005 iand whose sale is featured in the latest Real Reporter was harvested by the multifamily team at JLL. Its members are Managing Directors Michael Coyne and Travis D’amato plus Vice Presidents Kevin Gleason and Brendan Shields.
Earlier in 2016, Butler and St. John helped JSIP break into the Portland, ME, market when the group paid $87.5 million for 620 units located in two low-rise developments, that purchase considered a value-add opportunity. It put the firm’s holdings spread across four states above 1,200 units, a tally now in excess of 1,500 apartments. While Greeley did not divulge the names of suitors pursuing Factory 63, he describes it as a “competitive” process where many solid entities were vying in the same sphere as its winning bidder. “There was pretty much consensus pricing where a lot of people” were in the same area on value, he explains.
