BOSTON--(BUSINESS WIRE)--May 24, 2016--
Boston
Properties, Inc. (NYSE: BXP), announced today that it has
signed a binding agreement with real estate funds managed by Blackstone,
through its investment in Equity Office Properties, to acquire a 49.8%
interest in an existing joint venture with Teachers Insurance and
Annuity Association (“TIAA”) that owns the fee interest in Colorado
Center in Santa Monica, California. The agreed upon gross value for the
49.8% interest is approximately $511.1 million and Boston Properties
expects to pay the purchase price using existing cash balances. Boston
Properties will be the managing partner of the joint venture. There is
currently no debt on the property.
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Boston Properties Set to Enter New Market; Signs Agreement to Acquire a 49.8% Interest in Colorado Center in Santa Monica, California (Photo: Business Wire)
The acquisition will enable Boston Properties to enter the Westside Los
Angeles market, one of the most attractive real estate markets in the
country. With six buildings and approximately 1,184,339 rentable square
feet, as well as a three-level, underground parking garage with 3,100
stalls, Colorado Center is a premier office campus with a significant
amenity base and open outdoor space located in the Santa Monica office
market, which is home to the largest concentration of technology, media,
advertising and entertainment tenants in Los Angeles. The campus sits on
a 15-acre site in the Media and Entertainment District of Santa Monica,
and it is one block north of the Bergamot Station of Los Angeles
County’s new Light Rail service connecting Colorado Center to downtown
Santa Monica and Downtown Los Angeles. Colorado Center is currently 68%
leased.
The impact of the acquisition was not included in Boston Properties’
most recent earnings guidance issued on April 26, 2016. Assuming the
closing occurs on July 1, 2016 and that no debt is placed on the
property, Boston Properties estimates that the acquisition will increase
its projected 2016 diluted Funds from Operations by approximately $0.05
per share. Boston Properties anticipates the ability to increase the net
operating income from the property through the lease-up of approximately
370,000 square feet of currently vacant space, as well as the roll-up of
in-place, below-market rental rates to market rental rates as leases
expire. Boston Properties believes that current market rental rates are
approximately $10 per square foot greater than the weighted-average
rental rate on in-place leases.
“We are very pleased to be entering the Los Angeles market through our
acquisition of Colorado Center,” commented Owen D. Thomas, CEO of Boston
Properties. “Colorado Center is a proven and premier office campus,
which provides us the opportunity to use our real estate skills to
enhance and lease the property and realize the substantial upside
potential we see imbedded in the asset. We will also be acquiring
critical mass and an excellent platform for Boston Properties to enter
and grow in one of the strongest office markets in the United States. We
are also delighted to broaden our productive and long-term relationship
with TIAA, a leading investor in commercial real estate.”
The closing of the acquisition is subject to customary conditions and
termination rights for transactions of this type and is expected to
occur in July 2016. The Company has posted a $25 million deposit. There
can be no assurance that the closing will occur on the terms currently
contemplated or at all.
Boston Properties is a fully integrated, self-administered and
self-managed real estate investment trust that develops, redevelops,
acquires, manages, operates and owns a diverse portfolio of Class A
office space, one hotel, four residential properties and five retail
properties. The Company is one of the largest owners and developers of
Class A office properties in the United States, concentrated in four
markets - Boston, New York, San Francisco and Washington, DC.
This press release contains forward-looking statements within the
meaning of the Federal securities laws. You can identify these
statements by our use of the words “assumes,” “believes,” “estimates,”
“expects,” “guidance,” “intends,” “plans,” “projects” and similar
expressions that do not relate to historical matters. You should
exercise caution in interpreting and relying on forward-looking
statements because they involve known and unknown risks, uncertainties
and other factors which are, in some cases, beyond Boston Properties’
control and could materially affect actual results, performance or
achievements. These factors include, without limitation, the
Company’s ability to satisfy the closing conditions to the pending
transactions described above, the uncertainties of investing in new
markets, the Company’s ability to enter into new leases or renew leases
on favorable terms, dependence on tenants’ financial condition, the
uncertainties of real estate development, acquisition and disposition
activity, the ability to effectively integrate acquisitions, the costs
and availability of financing, the effectiveness of our interest rate
hedging contracts, the ability of our joint venture partners to satisfy
their obligations, the effects of local, national and international
economic and market conditions, the effects of acquisitions,
dispositions and possible impairment charges on our operating results,
the impact of newly adopted accounting principles on the Company’s
accounting policies and on period-to-period comparisons of financial
results, regulatory changes and other risks and uncertainties detailed
from time to time in the Company’s filings with the Securities and
Exchange Commission. Boston Properties does not undertake a duty
to update or revise any forward-looking statement, including its
guidance for the second quarter and full fiscal year 2016, whether as a
result of new information, future events or otherwise.
View source version on businesswire.com: http://www.businesswire.com/news/home/20160524006662/en/
Source: Boston Properties, Inc.
Boston Properties
Michael LaBelle, 617-236-3352
Executive Vice
President, Chief Financial Officer and Treasurer
or
Arista
Joyner, 617-236-3343
Investor Relations Manager