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© Copyright 2005 Globe Newspaper Company.
Published in The Boston Globe on 2/17/2005

Boston Wharf sells 2 more buildings in Fort Point Channel area for $34m
By Thomas C. Palmer Jr., Globe Staff

Boston Wharf Co. sold two of its remaining 19 historic buildings in the Fort Point Channel area, including its own company headquarters at 253 Summer St., for $34 million.

We've always been in our own buildings. This is the first time we've paid rent," Robert N. Kenney, president of Boston Wharf, said yesterday.

The sale of 253 Summer and adjacent 27 Melcher St., with a combined total of about 175,000 square feet, is the third major recent sale of property by the 160-year-old firm that was known for decades as the company that refused to sell. In fact, Boston Wharf was the company that filled in tidal land over the last century and a half and pioneered development in South Boston.

It is the fifth sale in almost five years and leaves Boston Wharf, which once owned 79 buildings, with 17.

In 2003, the company was negotiating the sale of 44 Fort Point Channel buildings with Tishman Speyer Properties of New York for an estimated $400 million, but the deal fell through after the parties disagreed on issues including the condition of the buildings.

But the three recent transactions, including this week's, totaled $223 million.

Boston Wharf's remaining properties are mostly along Summer, Melcher, and A streets.

Kenney said Boston Wharf's parent company in London, Peninsular & Oriental Steam Navigation Co., a global transportation company, is concentrating on development rather than investment. Boston Wharf has now disposed of most of its recently renovated and upgraded properties.

Much of what is left, about 1.2 million square feet including parking areas, is older, unimproved space and is likely to be redeveloped for multiple uses, including housing, office, and retail space.

''The balance we have now is considered our development site," Kenney said.

The Boston Redevelopment Authority would have to approve any development plans for the area. Kenney said ''mixed use" is likely. Boston Wharf's remaining buildings are about 90 percent leased, Kenney said.

The latest buyer of Boston Wharf buildings is Boston HSR South Boston LLC, a partnership that formerly owned the Doubletree Guest Suites Boston Hotel in Allston.

In 2000, Boston Wharf sold the A Street complex of 16 buildings now known as Channel Center to Beacon Capital Partners LLC for $40.5 million. That same year, Boston Wharf sold buildings and 10 acres of land to Gillette Co., a neighbor along Fort Point Channel, for $30 million.

Last summer Boston Wharf sold two blocks of renovated warehouse buildings leased by Thomson Financial, a Toronto financial services company, to an undisclosed client of HDG Mansur Investment Services Inc. for $92 million. And in December Berkeley Investments Inc. of Boston paid $97 million for a 12-building, 700,000-square-foot chunk of Boston Wharf's portfolio.

Alan Leventhal, a minority partner in Boston HSR LLC, said the company purchased the Boston Wharf buildings under a ''tax-free exchange" provision of the federal tax code. The company legally avoids paying taxes on the proceeds of the hotel's sale by reinvesting in other real estate. Harvard University recently purchased the hotel for $75 million.

A Boston HSR LLC affiliate also purchased 1100 Technology Park Drive in Billerica this month for $35.4 million.

Leventhal said about 10 investors, members of his family and their partners, participated in selling the Allston hotel and purchasing the Billerica and Boston Wharf properties.

He said he did not envision developing the Summer and Melcher street buildings.

''My view is the Fort Point Channel will continue to do well," Leventhal said. ''Long term, there's significant value in these assets."

Kenney said 27 Melcher is fully leased and 253 Summer has about 9,000 square feet of vacancy, a relatively low amount. Boston Wharf's offices will stay there for a year and a half, but then probably move.

''I'd like to be in my own buildings down the line," Kenney said.

Thomas C. Palmer Jr. can be reached at tpalmer@globe.com.
© Copyright 2005 Globe Newspaper Company.


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