GLL Real Estate Partners is under contract to acquire 200 State Street, reports Real Estate Finance and Investment. The timing of the close will be important for Broadway Partners as they continue to manage their highly leveraged capital structure. Last week a Boston Globe columnist reported that Broadway laid on more than $1.1 Billion of debt in its acquisition of the John Hancock Tower in Boston at the peak of the market. Now that the short term $472 million mezzanine piece is coming due, the Boston Globe estimates the property’s valuation is $100 million less than outstanding debt - even at a 5% cap.
The Real Estate Flux market predicting the sale price of 200 State Street rose to $190.1 million in early August but is now trading down at $184.7. See 200 State Street
Boston Globe | Steven Syre | August 29, 2008
“Beacon Capital was the buyer of One Beacon in 2006, acquiring the million-square-foot building for $423 million. The same firm was the seller of the Hancock Tower, which was turned over to Broadway Partners as part of a much larger real estate portfolio deal. The tower and a related parking lot went for about $1.3 billion.”
Broadway Partners is close to clinching the sale of their 200 State Street property in Boston, a sixteen story, 300,00 SF office building. The property should fetch close to $200 million, yet no terms have been disclosed. Given Broadway’s many sales overtures of late, the proceeds will undoubtedly go straight to paying down debt and shoring up their balance sheet. Here are some possible signs Broadway may have overextended before the credit crunch:
- Reportedly owe $1.2 billion of short term mezzanine debt to Lehman Brothers — now coming due
- Forbes Magazine features Broadway as poster child of unregulated investment vehicles run rampant
- Director of Institutional Marketing walking out - Director David Sullivan leaves for CBRE Investors
- Possible Distress sale of One City Centre in Houston
- Possible Distress sale of 450 West 33rd Street, a 1.6-million SF office property in Manhattan
Globe St. | Ian Ritter | August 5, 2008
Broadway Partners got the asset last year as part of a $5-billion portfolio acquisition from Beacon Capital Partners. Two hundred State St. also has a retail component that was acquired by an Ireland-based investment firm in 2005 for $51 million.
The Patriot-News | Charles Thompson | July 27, 2008
The article [in Forbes] highlighted PSERS’ $196 million investment in two funds run by New York-based Broadway Partners, a company that got so cash-strapped it was forced to apply for a one-year extension of short-term debt this spring to avoid foreclosures or fire sales.
August 6th, 2008 at 7:21 am
Broadway will have to fight to if there is further distress in these markets.
August 7th, 2008 at 7:21 am
Given that Broadway is selling Boston office properties at a premium over 2005 valuations, I don’t know that this signals the markets are in such dire straights. This may signal an “unfreezing”.
August 7th, 2008 at 7:23 am
You would have to check on Broadway’s timing in 05, if it was early 05, that was prior to a serious uptick in office markets.
September 3rd, 2008 at 12:13 pm
Even at an agressive cap rate, Broadway looks to have lost $300 million on John Hancock. Talk about “great” market timing…