Broadway Partners is looking for some money-men to help pay for its $5 billion portfolio buy from Beacon Capital Partners, which includes 237 Park Avenue and 100 Wall Street. The Observer reported the purchase last week.
The leading candidates are the usual suspects. Lehman Brothers, Morgan Stanley, RBS Greenwich Capital and Wachovia are all in contention, reports Paul Fiorilla of the Commercial Mortage Alert.
Mr. Fiorilla also offers an analysis worth reading:
The piece is a month old, but it’s fun in a wonky, finance way. The piece is after the jump.
– John Koblin
Broadway Wins Beacon Portfolio, Seeks Loan — Broadway Real Estate Partners has agreed to buy a giant office portfolio from Beacon Capital Partners for about $5 billion and is shopping for more than $4 billion of debt to finance the transaction.
In its second huge purchase from the Boston fund operator in recent months, Broadway is buying full or partial stakes that Beacon’s third opportunity fund holds in 15 properties encompassing 10 million square feet. The deal will completely unwind the holdings of that $1 billion fund. Broadway is expected to divide the debt package among at least three lenders, although a final decision hasn’t been made. Leading candidates for a piece of the deal include Lehman Brothers, Morgan Stanley, RBS Greenwich Capital and Wachovia. Those lenders have been the biggest lenders to New York-based Broadway, which is headed by investor Scott Lawlor. Also in the running are Citigroup and Goldman Sachs. Goldman and Morgan Stanley advised Beacon on the sale.
The deal is part of an astonishing wave of property sales involving Beacon, Broadway and Blackstone Group. In December, Broadway bought 10 office properties from Beacon’s $740 million second opportunity fund for $3.4 billion. Broadway has already flipped four of those buildings.
Separately, Broadway has agreed to buy the 1.7 million-sf office building at 450 West 33rd Street in Manhattan from a partnership headed by investor Joseph Chetrit. Broadway is expected to tap Wachovia for about $600 million of financing for the purchase.
And Beacon is under contract to buy 36 office properties in Seattle and Washington, D.C., for $6.4 billion from New York-based Blackstone, which assumed those buildings last Friday as part of its $39 billion acquisition of Equity Office Properties.
Broadway will apparently complete its latest acquisition from Beacon via its third value-added fund. Broadway is in the process of raising at least $1 billion of equity for that vehicle. Broadway might seek to flip some of the 15 properties, as it did in the previous deal with Beacon. Broadway’s third vehicle comes right on the heels of its second fund, which closed in December with $590 million of equity. Broadway’s two-month turnaround may be unprecedented. Gaps between fund-raising campaigns are usually at least six months and often a year or longer. The short time frame reflects the fact that Broadway has lined up two giant transaction in short order, as well as the ready availability of capital.
Among the properties Broadway is buying from Beacon are: *A 2.5 million-sf portfolio of office buildings in Rosslyn, Va.
*A stake in the 1.1 million-sf Park Avenue Atrium, at 237 Park Avenue in Midtown Manhattan. Monday Properties holds the remaining interest.
*The 466,000-sf building at 100 Wall Street in Manhattan.
*The 615,000-sf Figueroa Plaza office complex in Los Angeles.
*The 467,000-sf building at 1000 Wilshire Boulevard in Los Angeles.
In its first deal with Beacon, Broadway turned to Greenwich and Lehman for a $3.1 billion debt package. Broadway subsequently sold three Boston properties and a Denver property in the portfolio.
It sold the buildings at 197 Clarendon Street and 200 Berkeley Street in Boston to Manulife Financial for $454 million. It sold the building at 501 Boylston Street in Boston to TIAA-CREF for $370.5 million. And it sold the 489,000-sf Bank One Tower in Denver to Transwestern Investment’s Aslan Realty Partners 3 fund for $120 million. The building at 450 West 33rd Street currently has a $350 million debt package that Wachovia originated in March 2005. Wachovia securitized the $265 million senior portion via two commercial MBS deals. The building is fully occupied. The tenants include the Associated Press and Thirteen/WNET. The net operating income in 2005 was $22.3 million, according to securitization documents. There is no significant rollover of leases until 2011.