The Real Deal New York

Boston Properties lends $80M on 3 Hudson Boulevard project

REIT entered into JV with Joe Moinain to develop 2M sf tower
By Rich Bockmann | August 01, 2018 01:00PM

Boston Properties’ Owen Thomas and 3 Hudson Boulevard (Credit: REIT and FXFOWLE via Curbed NY)

Boston Properties is both lender and developer on the Hudson Yards office tower it’s co-developing with Joseph Moinian.

The real estate investment trust provided $80 million in debt to refinance a land loan at 3 Hudson Boulevard as part of its joint-venture with the Moinian Group, company executives said on Boston Properties’ earnings call Wednesday morning. Property records show that it replaces a mortgage of the same amount from American General Life Insurance Company.

Boston Properties last month announced it had purchased a minority interest in the Moinian Group’s 2 million-square-foot development project.

Company CEO Owen Thomas said on the earnings call that the REIT paid $46 million at closing to purchase a 25 percent stake in the development site, with a commitment to fund an additional $62 million if needed.

The developers still have to purchase air rights for the planned tower. In all, Boston Properties agreed to invest $500 million in the project.

Boston Properties executives calculate that their investment values the development at $360 per buildable square foot.

The project is the last Hudson Yards tower along West 34th Street looking for an anchor tenant. But Boston Properties president Doug Linde said that, given how late it is in the cycle, the company won’t reach to do a risky deal to land a tenant.

“As we move on in the cycle we, have toned down our risk tolerance for speculative space,” he said.

Thomas acknowledged that “it’s a thin market” to find the kind of significantly sized anchor tenant that they’re looking for, but added that “the good news is there are not that many options for such a tenant.”

Boston Properties expects it will take 36 to 40 months from the time they kick off vertical construction to when a tenant can move in. JLL’s Aaron Appel arranged Boston Properties’ $80 million loan on the project.

The company also gave an update on their long-stalled plan to redevelop the Metropolitan Transportation Authority’s headquarters at 343 Madison Avenue.

The project is still in the entitlements phase and needs to go through the city’s land-use process. But Boston Properties is now looking for a development partner.