10/29/2010

Beacon Seeking to Refinance Boston Trophy

A joint venture between Beacon Capital and Allianz is quietly shopping for a loan of more than $300 million on one of Boston's top office towers.

The fixed-rate mortgage would refinance debt on the 1 million-square-foot building, at One Beacon Street.

Beacon, a Boston fund shop, obtained a $308 million fixed-rate mortgage on the property in 2006, when it was the sole owner. Goldman Sachs originated the five-year debt, consisting of a $210 million senior mortgage and $98 million of mezzanine debt.

Goldman securitized the senior mortgage via a $4.2 billion pooled offering (GS Mortgage Securities Trust, 2006-GG8) and placed the mezzanine debt with high-yield investors. The senior loan has not amortized, and it's believed that the mezzanine debt also remains in place. The loan package matures in August.

The buzz is that the Beacon joint venture is showing the assignment to a select group of portfolio lenders, bypassing commercial MBS shops. The Beacon team presumably thinks balance-sheet lenders will find the trophy property so appealing that they will bid the loan down to interest-rate levels out of reach for securitization shops.

The office tower, which generated $25.9 million of net operating income last year, is 92% occupied. The tenants include Massachusetts Housing Finance Agency, law firm Skadden Arps and Deutsche Bank.

In February 2009, Beacon sold a 50% stake in the building to insurer Allianz for $254 million. The transaction valued the property at $508 million.

Some market players indicated that a new $308 million loan would carry a loan-to-value ratio of about 65%. That would peg the current valuation of the property at roughly $475 million.

The 34-story tower is at Tremont Street, atop Beacon Hill - the city's highest point, bordering the financial district. It was built in 1971 and renovated in the early 1990s and again in the early 2000s. The property includes a 309-space underground garage.

Beacon acquired One Beacon Street in 2006 from a Feil Organization joint venture for $423 million. It acted via Beacon Capital Strategic Partners 4, a value-added fund with $2 billion of equity.

Back Print