Boston Properties to Grab the 1.7 MSF John Hancock Tower in Boston for $930M

The John Hancock Tower's price tag of approximately $289.5 million in cash and the assumption of a $640.5 million senior mortgage loan with a 5.68 percent fixed rate constitutes quite a discount, considering that the property traded in 2006 for $1.3 billion.

October 4, 2010
By Barbra Murray, Contributing Editor

Boston Properties made a couple of major acquisition deals last month and it appears that the REIT’s trophy office property shopping spree is going to continue. Boston’s 1.7 million square-foot John Hancock Tower joins Boston Properties’ list of pending purchases with the company’s commitment to buy the 62-story high-rise for $930 million from joint venture affiliates of Normandy Real Estate Partners and Five Mile Capital Partners.

The John Hancock Tower’s price tag of approximately $289.5 million in cash and the assumption of a $640.5 million senior mortgage loan with a 5.68 percent fixed rate constitutes quite a discount, considering that the property traded in 2006 for $1.3 billion. The sale agreement, which includes an eight-level, 2,013-space parking, is not too shabby for the Normandy and Five Mile joint venture, either. A single year can make all the difference. The partners had bought the property for just $660 million in 2009 from lenders of Broadway Partners, which had acquired the asset in 2006 for the aforementioned $1.3 billion.

Normandy and Five Mile told CPE that they always recognized the special significance of the John Hancock Tower to the city of Boston, adding that, as careful stewards, they focused on restoring the property to its first place role in the city.

Boston Properties will be getting its hands on a premier office asset. Located at 200 Clarendon Street in Boston’s prestigious Back Bay neighborhood, the John Hancock Tower holds the distinction of being the tallest building in New England. In May, when private investment firm Bain Capital signed a 15-year lease for 208,000 square feet with the option to expand to a total of 270,000 square feet, the 34-year-old, Class A office tower became 95 percent leased. Cushman & Wakefield Inc., the commercial real estate services firm that brokered the transaction, is presently marketing the remaining space in the building for an annual $40 to $60 per square-foot.

The John Hancock Tower is just one of Boston Properties’ recent mega-deals. In late September, the REIT signed on to acquire the 1 million-square-foot Bay Colony Corporate Center in Waltham, Massachusetts, for $185 million, and just days before that agreement, closed the $275 million acquisition of the 350,000 square-foot office property at 510 Madison Avenue in midtown Manhattan.

The REIT expects the John Hancock Tower transaction to close in the fourth quarter.