A local investor's purchase of a downtown high-rise has landed Boston's office investment market one of its biggest wins since the early days of the pandemic — even if it comes at a hefty discount.
TIAA real estate offshoot Nuveen cemented a deal to sell the 32-story tower at 99 High St. to Synergy Investments for $227 million, marking one of the largest office acquisitions to close in the city over the past half decade. Similar to a majority of other office acquisitions that have closed across the country in recent years, the price tag for the roughly 730,200-square-foot property is substantially less than what it previously traded for as investors help reset pricing while trying to rebound from the effects of the pandemic.
The New York-based finance giant paid more than $272 million for the High Street tower in 2005. Through the deal with Synergy, which closed earlier this week, the local investment firm will assume the mortgage on the property from MetLife, according to property records.
More than $24 million in capital improvements have been made to the tower over the past decade in an effort to modernize and position it ahead of competing properties in the downtown area. The building is nearly 80% leased to a mix of tenants including AIG, Bristol Myers Squibb, Mercer, Marsh McLennan, among others, according to CoStar data.
Representatives for Nuveen did not immediately respond to CoStar News' requests for comment.
Discounted opportunities
Heavily discounted acquisitions are part of a theme that has played out across the nation, as property owners work to get financially stressed properties off their books.
The combination of depressed demand, stagnant leasing and the ongoing effects of flexible work has helped push the national office vacancy rate to a record high of nearly 14%, according to CoStar data. Tenants collectively handed back upward of 65 million square feet last year, boosting the total to more than 210 million square feet of move-outs since the start of 2020.
Those pandemic-induced factors have been exacerbated for a number of landlords across the country, and some — especially if they're facing maturing loan deadlines or mounting expenses — have been eager to offload underperforming properties, even if it means closing a deal at a deep discount to their initial investments.
Yet for some hopeful investment firms, the region's challenges and corresponding valuation drops have created a discounted opening.
Boston's Synergy, for example, has been on an acquisition streak in recent years, scooping up a handful of bargain deals to expand its portfolio of offices across the region.
"To be able to acquire a Class A asset, in an exceptional location, close to transportation and amenities — we'll buy those assets all day long," Synergy founder Dave Greaney said in a statement. “The addition of 99 High St. to our portfolio solidifies Synergy’s prominence as one of Downtown Boston’s premier owners and operators, [and] Synergy will continue to invest in high-quality assets in prime locations across the city."
The firm's latest High Street purchase, its largest to date, adds to a list of recently closed deals that include One Liberty Square, 179 Lincoln St., 1 India St., and 101 Arch St.