Related Recaps Boston Office Tower in $342M Deal

Related Fund Management has recapitalized Congress Square, an 372,000-square-foot office property in downtown Boston. Hodges Ward Elliott arranged the deal, in which a Korean investor group led by Hana Financial and KTB Asset Management acquired a 95 percent stake in the recently redeveloped property. The parties are remaining mum on financial terms, but according to Suffolk County land records, the transaction was valued at $342 million. The HWE team of Paul Gillen, Anthony Ledesma, Daniel Parker and Allie Boyan acted on Related’s behalf to orchestrate the equity for the new partnership. Securing options for recapitalization did not present a challenge for a premier asset in a premier office market, but there was one hiccup, and it was a sign of the times. “The closing took longer than expected, as international travel restrictions due to the pandemic delayed the process,” Paul Gillen, managing director at Hodges Ward Elliott, told Commercial Property Executive.

Distinctive design

Located at 40 Water St., Congress Square is a distinctive office and retail destination that has captured attention with a design by Arrowstreet that blends old and new. Developed at the turn of the 20th century to accommodate the city’s financial institutions, the property formerly housed the world headquarters of Fidelity Investments. Related Beal, which currently manages the asset, redeveloped what had been three separate structures into a single building that integrates a new 7-story addition resembling a glass jewel box that sits atop the original structure as if it grew there. HWE pulled double duty on the Congress Square transaction, as the firm’s debt capital markets team, led by Lawrence Britvan and Jordan Kirkbride, arranged financing for the venture through KKR. Forethought Life Insurance Co. provided a $228 million loan, according to Suffolk County records. “The attractiveness of the Boston office market and the quality of the asset made this a compelling investment overall,” Gillen said. “Not surprisingly, there was a healthy response from the lending community, as numerous equity and debt sources expressed interest in financing the Congress Square investment opportunity.”