News
FAN PIER: QUARTER CENTURY DEAL
July 13, 2011
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| The new $900M, 1.1M SF Vertex HQ on Fan Pier is not only the nation's largest private construction project and the city's largest lease ever, many say it's the game changer that will build out Fan Pier and more at Boston Harbor. We snapped HFF?s John Fowler who just closed on the construction financing and has spent nearly 30 years to help make it happen. |
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| Here's HFF's Anthony Cutone (relaxing at an undisclosed location on the Cape). He worked with John to close on the $355M construction loan from Fortress Investment. John tells us that the push to develop Fan Pier dates back to the ?70s when Carpenter Co's Dick Friedman introduced the Pritzkers to landowner Anthony Athenas. He agreed to a land lease with the Pritzkers in the early '80s. The Hyatt heirs spent about $10M to permit the property. By ?85, John secured the financing for the Pritzker?s big mixed-use project. But as the market heated up, Anthony sought a richer deal, wound up in a lawsuit, the deal deconstructed, and the Pritzkers won much of the Fan Pier land at no cost. |
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| In ?05, John (with the Vertex deal book) sold the land for the Pritzkers to The Fallon Co and MassMutual for about $115M. The Chicagoans walked with a tidy profit but without their Boston Harbor trophy. In ?08, The Fallon Co had Vertex as a tenant. John was talking to Fortress about financing one office/lab building, possibly two, but the capital markets collapsed. Fast forward to early ?11. John and Anthony took the Vertex construction loan back to the market but were facing new challenges. Compared to the peak, lenders are more cautious and loan proceeds much lower. And, while Vertex has a $10.6B market cap and impressive pipeline, John says they weren't making money and so weren't credit-rated. But with Vertex? May FDA approval for a new hepatitis C drug, called INCIVEK, and Boston's biggest lease, the deal is done. (And we can finally stand in awe of its immensity.) |
