MAR 2007 VOL. 2

Investment Notes

The repercussions of the biggest completed private-equity buyout, the $39 billion acquisition of Equity Office Properties, continue to ripple through the real estate market. No sooner had the deal closed on Feb. 7 than Blackstone disclosed a deal to sell off a portfolio of EOP’s New York City properties, including the Verizon headquarters tower on 6th Avenue to New York Developer Macklowe Properties. The price: $7 billion.

Then, on Feb. 20, Mcguire Properties, a California-based public REIT, announced that it has struck a deal to buy 24 EOP buildings in Orange County and Los Angeles for $2.88 billion.

Next up, it seems are EOP properties in Boston. On March 7, the Boston Globe reported that Russia Wharf, a redevelopment site slated for mixed-use development, was sold to Boston Properties. According the Globe, Boston Properties beat out Tishman Speyer Properties, the Related Cos. and Hines Interests LP, with a $100 million bid—one of the highest sale prices for a Boston office building .The estimated per-square-foot price for the three-building complex was $600-per-square-foot

According to CoStar, the Atlanta-based real estate data provider, Blackstone has not looked for a single portfolio buyer in Boston, as it did in New York. Other Boston assets that the private-equity giant is believed to be marketing include the 1 million-square-foot tower at 100 Summer St., the 916,722-square-foot State Street Bank Building at 225 Franklin St. and One Post Office Square.

According to some analysts, these secondary deals may have a salutary effect on the office investment market, by putting more properties in play; demand has been so storng that it has been difficult for investors to find suitable properties.