Fidelity Pursuing $270 Million Sale Leaseback of Two Boston Office Buildings

Boston Herald - April 30, 2004

Fidelity Investments is putting on the market a significant block of its downtown Boston real estate holdings in a bid to cash in on a hot investment market for fully leased office properties.

The financial services giant plans to sell the 900,000-square-foot 245 Summer St. building, next to South Station, and a much smaller 7 Water St., near Post Office Square, a company spokeswoman confirmed yesterday.

The move is part of an effort, said spokeswoman Anne Crowley, to cash in on sky-high demand by real estate investors for office buildings leased to high-quality corporate tenants. As part of the deal, Fidelity will lease back its space in the former Stone & Webster building - a key factor that would make the 14-story South Station high-rise more valuable to investors, observers say.

Fidelity bought the 1970s era edifice for roughly $190 million in 1999. The financial services giant could get nearly $100 million more for it, noted one real estate executive.

In opting to put the downtown buildings on the block, Fidelity may be eyeing the record, $705 million sale of the recently completed State Street Financial Center. That 1 million square foot tower sold for more than twice its $350 million development cost, largely due to its lease to State Street Corp., observers say.

Fidelity, at the least, could sell 245 Summer for $300 a square foot - or $270 million - with the price going up from there, noted Gary Lemire of CB Richard Ellis/Whittier Partners. It's also expected to lease back space it occupies at 7 Water St.
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