Rockpoint Sells Stake in Boston Gem for $243M

Newmark Knight Frank orchestrated the company's recapitalization of 75-101 Federal St. with the sale of a 50 percent interest in the interlinked office towers.
75-101 Federal St. Image courtesy of Newmark Knight Frank

Rockpoint Group LLC has recapitalized 75-101 Federal St., an approximately 850,000-square-foot trophy office property in Boston. With the assistance of Newmark Knight Frank, Rockpoint sold a 50 percent interest in the downtown asset to Carr Properties. for $242.5 million.

READ ALSO: Boston Office Report – Fall 2019

Rockpoint’s recapitalization of 75-101 Federal comes five years after the real estate private equity firm and registered investment adviser acquired the property from a Pearlmark Real Estate Partners-led joint venture in a $326.5 million transaction. Located in Boston’s Financial District, 75-101 Federal consists of two interlinked towers: The 21-story Art Deco building at 75 Federal St., originally developed in the late 1920s; and the 31-story high-rise at 101 Federal St., which first opened in 1988. Together, the buildings encompass a total of roughly 800,000 rentable square feet of office space, nearly 20,000 square feet of retail offerings and a 175-space below-grade parking facility.

The transit-oriented property has maintained its Class A status through renovations over the years, including an upgrade that yielded a 10,000-square-foot tenant-only fitness facility and improvements that garnered LEED Gold certification. Today, 75-101 Federal is home to a diverse roster of tenants ranging from financial companies and law firms to nonprofits and tech startups. NKF’s Robert Griffin, Edward Maher, Matthew Pullen and Samantha Hallowell, all members of the firm’s Capital Markets group, spearheaded the recapitalization transaction on Rockpoint’s behalf.

Big buys in Beantown

Boston office assets are high on the investment community’s radar for more than a few reasons. “Boston enjoys strong structural advantages including its outstanding educational institutions, which act as a talent magnet, and its powerful tech industry, which accounts for 10 percent of Boston’s jobs base,” according to the Urban Land institute and PwC’s Emerging Trends in Real Estate 2020 report, which rates the Boston office market as a “buy” for the year. The city’s robust office fundamentals are like catnip to investors. In 2019, the overall vacancy rate in Boston’s central business district dropped to 7.1 percent, net absorption totaled a record 1.9 million square feet and the average rental rate for Class A properties topped $75 per square foot, according to a fourth quarter 2019 research report from NKF.

Office investment exceeded $8 billion in metropolitan Boston in 2019, and 2020 will likely be another banner year. “This is an expensive area and has affordability and congestion issues to cope with [but] our local survey respondents do not foresee such issues slowing down future investment, with Boston earning the second-highest score—after Austin and ahead of Nashville—for investor demand expectations,” according to the ULI-PwC report. Notable transactions announced this year include Investcorp and Brickman’s acquisition of the approximately 185,000-square-foot property at 535-545 Boylston St. in the CBD’s Back Bay neighborhood for $128 million, and Alexandria Real Estate Equities’ $235 million purchase of the 510,000-square-foot Riverside Center in Newton.