Boston Properties Inc. (BXP - Free Report) , in collaboration with Hines, announced the completion of the acquisition for a land parcel - 101 First Street, next to the Transbay Terminal. The companies bought the asset from Transbay Joint Powers Authority (TJPA) for roughly $192 million.
101 First Street, a 50,000 square foot land parcel, was sold at nearly $4,000 per land foot. Notably, during the fourth quarter of 2012, Boston Properties penned a JV with an affiliate of Hines to acquire a land in San Francisco with the purpose of building Transbay Tower. Both the partners hold a 50% interest in the JV.
The Transbay Transit Tower will be positioned adjacent to the Transbay Transit Center. The 61-story building sprawling over 1,070 feet, is touted to become the highest on the U.S. west coast area and the 7th tallest in the U.S., thus fading the popularity of New York’s Chrysler Building. Boston Properties expects to initiate construction of the 1.4 million-square-foot tower as early as summer 2013. The project is expected to complete in 2016, just prior to the opening of the Transbay Transit Center.
The Transbay Transit Center is a $4 billion visionary transportation and housing project initiated by TJPA. The project will replace the existing Transbay Terminal at First and Mission streets in San Francisco with a modern regional transit hub connecting 8 Bay Area counties and the State of Calif. through 11 transit systems.
The abovementioned acquisition is a strategic fit for Boston Properties as it is expected to strengthen its footprint in the San Francisco market - one of the 5 prime operational markets of Boston properties. In connection to this, last month, the company sealed the buyout of a development site – 535 Mission Street – in San Francisco from Beacon Capital Partners for $71.0 million.
According to CBRE Group Inc. , San Francisco remained one of the top office markets among the 30 most desirable office markets in the U.S. during the fourth quarter of 2012. Strong demand from the technology sector drove robust leasing activity and represented 55% of the downtown market’s 10.9 million square feet of leasing activity. Thus, San Francisco office rents jumped 27% year over year during the quarter. These factors justify Boston Properties’ decision to expand its reach in the San Francisco market.
Boston Properties currently holds a Zacks Rank #3 (Hold). Other REITs that are performing better than the company include Brandywine Realty Trust (BDN - Free Report) and Simon Property Group Inc. (SPG - Free Report) . Both these stocks carry a Zacks Rank #2 (Buy).