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CMA
November 18, 2016  

Buyer of Boston Labs Shopping for Financing

A joint venture is looking to line up a $130 million acquisition loan on a laboratory/office property in Boston’s Seaport District.

Related Beal has agreed to buy the leasehold interest in the 287,000-square-foot building, at 27 Drydock Avenue. The preference is for a floating-rate loan with a term of five years, possibly including extension options. JLL is showing the assignment to lenders.

The sale price is unknown, but the property was marketed with an estimated value of $160 million. That would indicate a relatively high loan-to-value ratio. But a portion of the financing would be structured as future funding for tenant improvements, mitigating the leverage. Related Beal is a joint venture formed in 2013 by Related Cos. of New York and Boston-based Beal Cos.

JLL also is representing the seller, a partnership affiliated with Boston-based North Star Management. The marketing campaign highlighted the opportunity to take advantage of spillover demand from nearby submarkets in Boston and Cambridge, where lab space is nearly fully leased and rents are reaching record highs.

When the building went on the market in August, it was 90% occupied by 19 tenants with a weighted average remaining lease term of 4.5 years. Rents were described as being 30% below average asking rates for similar space.

The largest tenant is the Dana-Farber Cancer Institute, which is leasing 55,000 sf until 2021. Others include Invicro (31,000 sf) and Ginkgo Bioworks (29,000 sf).

The space that’s changing hands is part of a much larger structure that was developed nearly a century ago by the U.S. Department of Defense as an ammunition warehouse. The city took ownership in the early 1980s, and much of the property was transformed into industrial space.

Jamestown Properties of Atlanta purchased the bulk of the eight-story structure, encompassing 1.4 million sf, in 2013. It converted portions of the space into offices for technology companies; shops and restaurants; and showrooms for vendors of luxury home furnishings. Helaba and J.P. Morgan provided a $140 million loan on Jamestown’s space last year.

The overall structure stretches for several blocks along Drydock Avenue. The city owns the underlying land. The property is just off Interstate 90, close to the Boston Convention Center and Boston Logan International Airport.