Rockefeller Group, Mitsubishi Sell Boston Trophy Tower

TA Realty arranged the $418 million sale of 28 State St., a 479,000-square-foot office building in the city’s Financial District. According to published reports, Heitman Capital Management is the new owner.
28 State St., Boston
28 State St., Boston

With the help of real estate investment management services firm TA Realty LLC, Rockefeller Group U.S. Premier Office Fund LP and Mitsubishi Estate New York have sold 28 State St., a 579,000-square-foot office tower in downtown Boston. The joint venture pocketed $418 million on the disposition of the Class A building. The buyer was Heitman Capital Management, according the Boston Business Journal.

Originally developed in 1968 and comprehensively renovated in the late 1990s, 28 State features 572,000 square feet of Class A office accommodations and 7,000 square feet of retail space in downtown Boston’s thriving Financial District. The 40-story high-rise, designed by architecture firm Emory Roth & Sons, is 95 percent occupied, with notable financial services and law firms taking up space on the tenant roster. The property attracted a great deal of attention from the investment community. 

“The asset quality and ideal location together with strong market fundamentals made 28 State Street a highly compelling acquisition opportunity,” Jim Raisides, partner with TA Realty LLC, said in a prepared statement. “This trophy property produced a very competitive bid process.”

A fruitful four years

Rockefeller and Mitsubishi had owned 28 State since 2014, when the partners acquired it from The Blackstone Group/Equity Office. TA Realty’s involvement with the property began well before the arrangement of the sale; the firm provided asset management and advisory services that paved the way for Rockefeller and Mitsubishi to bolster 28 State’s value through enhanced operations and capital improvements. It was a highly successful undertaking, and the numbers tell the story.

Rockefeller and Mitsubishi purchased 28 State at a cost of $593 per square foot four years ago, and the partners just sold the asset at the substantially increased price of $721 per square foot. The markedly higher price is indicative of the building’s status, but it’s also a sign of the times in the Boston office market. “Boston remains a highly-desirable destination for capital among all investor types and the limited inventory of available properties for sale continues to drive up pricing,” according to a first quarter 2018 report by commercial real estate services firm NAI Hunneman. “When downtown assets do change hands, buyers pay a premium.”

 Image courtesy of TA Realty