© Copyright 2005 Globe Newspaper Company.
The Boston Globe
August 18, 2005Local partners to buy Fan Pier
Fallon, MassMutual said to pay $115mBy Chris Reidy, Globe Staff
A partnership made up of Boston developer Joseph F. Fallon and Massachusetts Mutual Life Insurance Co. has agreed to purchase Fan Pier on the South Boston Waterfront, two months after Mayor Thomas M. Menino prodded the current owners to find a buyer who could make something happen.
The sales agreement was disclosed in a statement yesterday by Nicholas Pritzker, vice chairman of Global Hyatt Corp., and a member of the Chicago family that owns the property.
The statement did not mention a purchase price, but people involved in the sales negotiations said it is $115 million, about $10 million less than preliminary offers for the property the Pritzker family accepted last year.
Languishing for decades and mostly used as a parking lot, Fan Pier has been a symbol of disappointment on the waterfront. The hope has been that developing Fan Pier would help transform the South Boston Waterfront from an industrial port to the city's next commercial and housing frontier.
''This is terrific news for the city," Menino said. ''This is one of the most important developments in our city. It's a gateway to our waterfront, and it's been vacant for too long."
Pritzker said that Fallon and Cornerstone Real Estate Advisers LLC, a MassMutual subsidiary, negotiated the purchase on behalf of the partnership. Calls to Fallon and MassMutual seeking comment were not returned. But Fallon, president of Fallon Co., said in a statement, ''The partnership intends to engage an architect to design the first commercial building on the Fan Pier within the next 30 days."
Given the strength of the housing market, and the relative weakness of the office market, it was expected that a developer would proceed with residences first.
Fallon, Springfield-based MassMutual, and Cornerstone have been active in this part of Boston. MassMutual provided financing for South Boston's Seaport Hotel, and Fallon and Cornerstone are partners in Park Lane Seaport, a 465-unit luxury high-rise apartment complex nearing completion across from Jimmy's Harborside Restaurant. Fallon also is part of a team led by developer Stephen R. Karp with plans for developing nearby Pier 4. Fallon is part of another team developing a Westin Hotel next to the Boston Convention & Exhibition Center in South Boston.
The sale for the 20.5-acre Fan Pier site is expected to close by the end of September.
But given the site's history, that's no sure thing.
Last year, two teams of potential buyers -- one led by Karp, another by Miami home builder Lennar Corp. -- made preliminary offers of $125 million to buy Fan Pier. The deals fell through when the buyers reportedly concluded the price was too high. The Lennar team, which included LNR Property Co., made a subsequent offer of $100 million.
Yesterday, in a statement, David Hall, an LNR senior vice president, made reference to what Fallon and MassMutual have apparently agreed to pay for Fan Pier. ''Fan Pier is a great opportunity, and we wish the winning bidder well," Hall said. ''However, LNR was not going to go to that price."
The cost of building on waterfront land and the public amenities any new owner would be required to provide have made potential buyers leery of paying too much for the property. Already underway on the site is the construction of a new home for the Institute of Contemporary Art.
The Pritzker family won ownership of Fan Pier in a lawsuit in 1989 and, after a grueling four-year process, obtained permits that would allow for about three million square feet of development, including residential, office, hotel, and public space. It's been estimated that it will cost $1.2 billion to develop the site.
Earlier this year, Menino grew impatient with what he saw as a lack of progress. In June, he threatened to challenge the Pritzkers' development approvals for the site in an effort to spur action.
If the city were able to rescind those approvals, the Pritzkers or another developer would have to spend several more years and millions of dollars to get permission to build on the land.
Fan Pier is near the John Joseph Moakley Federal Courthouse and Anthony's Pier 4 restaurant. It is also close to downtown and the new convention center, which opened last year.
But as other nearby projects got done, Fan Pier continued to defy development efforts, through several economic cycles. Yesterday Menino was optimistic.
''Today's announcement ensures that Fan Pier will finally become a reality," Menino said.
In a statement referring to Fan Pier's buyers, Pritzker said, ''We have been assured they will keep Hyatt's commitments to make Fan Pier a development Bostonians can be proud of for generations."
Chris Reidy can be reached at reidy@globe.com.
© Copyright 2005 Globe Newspaper Company.
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