Daily market intelligence on mortgages, equity raising, investment sales, and CMBS.

Wednesday, 25 April 2001

Boston Properties Completes Citigroup Center Buy

Written by 
Rate this item
(0 votes)
April 26, 2001



NEW YORK – Boston Properties Inc. (NYSE:BXP) and Allied Partners will pay $755 million for Citigroup Center in Manhattan, once closing and other costs are factored into the deal.

The REIT and its partner paid $725 million in cash and Boston Properties stock, which factors to about $439/sf, for the 1.65 million-square-foot office building. The seller, Dai-Ichi Life Investment Properties Inc., is a Japanese insurance company that had owned a major stake in the building since 1987.

Deutsche Bank is providing a $525 million first mortgage to the borrowers, while Allied is putting up $35 million of equity. And Boston Properties is footing the balance of the equity – about $195 million. But all of that is in the form of stock – a combination of common and preferred.

The REIT is promising Dai-Ichi a 10 percent priority return for 10 years in that Dai-Ichi's return will take priority over any return that Allied receives.

Dai-Ichi began looking to cash out of its two-thirds condominium stake in Citigroup Center, early last year, while the New York office market was still hot. The building, at 153 E. 53rd St., occupies almost an entire city block between Lexington and Third avenues and 53rd and 54th streets.

Dai-Ichi had bought the two-thirds interest in Citigroup Center, as well as a one-third interest in 399 Park Ave., Citibank's former headquarters, from the bank back in 1988 for $670 million.

"We advised Dai-Ichi that a higher price could be achieved if we could take control of the other third of the building and sell the entire property as a whole," said Thomas R. McClayton, managing director of LaSalle Investment Management and Dai-Ichi's investment adviser. Clayton, along with Woody Heller, managing director of Jones Lang LaSalle Capital Markets, Noble Carpenter, managing director, and Carly Borg, associate, represented Dai-Ichi in the deal.

Dai-Ichi signed a contract to buy Citibank's remaining stake in the tower in November, and Citibank agreed to acquire Dai-Ichi's interest in 399 Park Ave. Terms of those deals could not be learned. At the same time, Jones Lang LaSalle negotiated a long-term lease so that Citibank could continue to occupy the portion of Citigroup Center it had just contracted to sell.

By structuring such a deal, Dai-Ichi got a better price for the Citigroup tower, while the bank was able to accomplish its goal of owning 100 percent of its world headquarters at 399 Park Ave.

Citigroup Center was built in 1977 and renovated in 1997. It is fully leased to such tenants as Citigroup, O'Melveny & Myers, Kirkland & Ellis and AT Kearney. Citibank leases 521,772 sf on 18 floors.

Boston Properties will manage and lease the 59-story tower, bringing to 4.5 million sf of Class-A office space that the company owns and manages in midtown Manhattan. Its four in-service properties – 599 Lexington Ave., 875 Third Ave., 280 Park Ave. and Citigroup Center – are all located within a five-block area bordered by 48th Street and 53rd Street, the heart of midtown.


Property information provided by MrOfficeSpace.com.


Comments? E-mail Susanna Potter, or call her at (215) 504-4288, Ext. 212.




weekly-call-to-action

“The Weekly”

“The Weekly” is Commercial Real Estate Direct’s PDF newsletter, sent to subscribers every Friday morning. With over 100 news stories published on Commercial Real Estate Direct each week, “The Weekly” features the top stories in commercial real estate that industry participants need to know first. “The Weekly” also contains:

  • Breaking mortgage, CMBS, and REIT news

  • Quarterly league tables with rankings of B-piece buyers, book runners, and lenders

  • Industry moves and changes in “The Insider“

Additional Info

  • Syndicate to Realpoint: No
  • Cities: New York City
  • States: New York
  • Sector: Office
  • Subject: Mortgages/Financing (MOR), Property Acquisitions (ACQ)
  • Company: Allied Capital Corp., Bradley Real Estate, Clarion Partners, Dominion Bond Rating Service, Julien Studley Inc.
  • Valuation: More than $150 million
Read 479 times

Data Digest

 

CMBS DELINQUENCY VOLUME

dqdataFP1

 

CMBS SPECIAL SERVICING VOLUME

sschartfp

Top Bookrunners Domestic, Private-Label CMBS - 2017
Investment Bank #Deals Vol$mln MktShr%
Goldman Sachs 17.59 11,819.34 13.68
JPMorgan Securities 14.52 10,968.11 12.70
Citigroup 12.04 10,012.71 11.59
Wells Fargo Securities 14.02 9,936.06 11.50
Deutsche Bank 12.55 9,879.74 11.44

 

RCA CPPI

 

cppichart FP

 

 

CMBS 2.0 Spreads

AAAspreads

Top CMBS Loan Contributors - 2017
Lender #Loans Vol$mln MktShr%
Goldman Sachs 146.89 11,719.34 13.63
JPMorgan Chase Bank 117.68 10,114.14 11.76
Deutsche Bank 198.48 9,689.97 11.27
Morgan Stanley 166.18 8,539.78 9.93
Citigroup 199.05 8,088.24 9.41

 

 

 

REITCafe

  • Challenging Retail Environment Weights on REITs
    Mixed economic news is weighing on retail markets, pushing REIT performance down in 2015. This week, the National Retail Federation announced that back-to-school spending is expected to be down 9.3% in 2015. This news came on the heels of a report from the Commerce Department stating that retail sales declined 0.3%...
     
  • US REITs Feeling Effects from Turmoil in Greece and China
    International economic forces have taken center stage this week, affecting both US stock markets and REITs. The crash in the Chinese stock market and ongoing concerns about the future of Greece in the eurozone drove markets down during the first half of the week. REITs fared better than the overall market...

  • What Does Increased Construction Mean for Apartment REITs?
    REITs so far this year have raised $17.1 billion of capital through the sale of unsecured notes, bringing the total raised over the past two and a half years to just more than $75 billion. That’s more than they raised during the previous five years. The massive volume shouldn’t be a surprise as it comes while the yield from 10-year Treasury bonds, the benchmark...
shouldn’t be a surprise as it comes while the yield from 10-year Treasury bonds, the benchmark against which most REIT’s price their bonds
warehouse-backstage