Boston Properties (NYSE:BXP
) disclosed in its latest quarterly report to investors that it has agreed to form a joint venture with another firm for the purpose of owning and operating Fountain Square, a twin-building office and retail complex measuring approximately 475,000 square feet in Northern Virginia's Reston submarket, where the REIT has a large presence.
One and Two Fountain Square at 11911 and 11921 Freedom Drive are 11-story buildings built in 1990. The 249,207-square-foot One Fountain Square is approximately 90% leased, while the 225,723-square-foot Two Fountain Square is fully leased.
Although the identity of the joint venture partner was not disclosed, it is widely believed to be Fountain Square's current owner, Beacon Capital Partners of Boston. Under the agreement, Boston Properties stands to obtain a 50% stake in the property, valued at $385 million, for $87 million. The JV will also assume approximately $211.3 million in mortgage debt associated with the property.
After closing, Boston Properties said it expects to consolidate this joint venture. The agreement gives Boston Properties the right to acquire the partner's 50% interest, and gives the partner the right to force Boston Properties buy out the partner's interest on January 4, 2016, for $102 million in cash. The fixed price option rights expire on January 31, 2016.
Boston Properties already owns more than 1.5 million square feet of office space
in the Reston market. Other RTC buildings Boston Properties has developed or own include One and Two Freedom Square completed in 1999. Boston Properties developed the pair of 18- and 16-story office buildings in a joint venture with another firm that Boston Properties subsequently rolled up full ownership in 2003. Also in Reston Town Center, Boston Properties developed and owns One and Two Discovery Square, a pair of nine-story office buildings built in 2002, and phase one of South of Market, which consists of three office buildings with street-level retail space
measuring approximately 650,000 square feet. The REIT also developed Democracy Tower, an eight-story office building
, as part of the South of Market mixed-use development.
On an adjacent block, Boston Properties built a nine-level parking structure with ground-floor retail with its top deck serving as the pad for a fourth office building currently under construction. In total, including the fourth office building, South of Market contains over 850,000 square feet of space and approximately 2,400 structured parking spaces.
More recently, Boston Properties began construction on a 15-story, 359-unit rental apartment tower on "Block 16," the last undeveloped parcel in the mixed-use complex. Completion is scheduled for late 2013.