The Boston Globe has new details about Broadway Partners’ financing troubles stemming from its $1.3 billion shopping spree in 2006, homing in on its highly leveraged purchase of Boston’s John Hancock Tower and a related parking lot, which were part of a Beacon Capital Partners portfolio.
According to The Globe:
"Broadway bid aggressively to buy the Hancock Tower near the height of the market and borrowed heavily to make it work. A long-term first mortgage for $640 million is piled on top of short-term mezzanine financing of $472 million, according to a real estate executive with access to the numbers. All in, call that $1.1 billion of debt.
But, according to The Globe, the building is only worth about $1 billion, which is "a big number, unless you already owe $1.1 billion on the same tower."
There’s been much speculation about Broadway Partners, in the wake of its voracious buying spree right before the market turned sour. Betwen 2002 and 2007, Broadway Partners spent more than $13 billion buying up trophy scrapers across the country, including its purchase of the Park Avenue Atrium and 100 Wall Street in May 2007, as part of another, in this case 24-building, portfolio purchase from Beacon.
In June 2007, Broadway Partners announed that it had also gobbled up the aesthetically-challenged Daily News building at 450 West 33rd Street.
How Broadway Partners is coping with all of this short-term financing coming due remains unclear.
According to The Globe, "a spokesman for Broadway Partners, Rick Matthews, said the firm does not discuss details of its business in public and declined to talk about Hancock finances.
"One thing Matthews confirmed: The [Hancock] tower’s vacancy rate projected for Jan. 1 is about 15 percent, a high number. He called that an unlikely worst-case scenario and said Broadway Partners expected to sign new leases before the end of the year."