Senior Housing Properties Buys Vertex Pharmaceuticals Global HQ in Boston for $1.1B

By Gail Kalinoski, Contributing Editor

In the biggest deal in Boston so far this year, Senior Housing Properties Trust (SNH) has acquired the Vertex Pharmaceuticals headquarters on Fan Pier in the Seaport District from The Fallon Co. and an institutional investor for $1.1 billion.

Fallon, one of Boston’s leading real estate investment and development companies, completed the 1.6 million-square-foot mixed-use property in December. Vertex Pharmaceuticals, a global biopharmaceutical company, is leasing 96 percent – all of the office/lab space – of the two 16-story buildings for 15 years. It is consolidating approximately 1,300 employees from 10 buildings in Cambridge, Mass.

David Hegarty, president & COO, said in a SNH release that the acquisition was a “unique opportunity to further diversify SNH’s portfolio and increase our exposure to the medical office building segment.”

The Newtown, Mass.-based REIT owns independent and assisted living communities, medical office buildings, nursing homes and wellness centers throughout the United States.

“This transaction is consistent with our stated strategy to focus on medical office buildings and private-pay properties,” Hegarty added.

Jeffries Finance L.L.C. acted as financial advisor to SNH for the acquisition and along with Wells Fargo Bank had given SNH a term loan commitment for $800 million prior to the closing. SNH also said it has a $750 million unsecured revolving credit facility available to partially fund the acquisition.

HFF exclusively marketed the sale of the two towers for Fallon and an institutional investor advised by Cornerstone Real Estate Advisors L.L.C. The HFF investment sales team was led by executive managing director John Fowler, senior managing director Coleman Benedict and director Ben Sayles.

“It was a thrill to work on this seminal transaction. SNH purchased two world-class buildings in one of the hottest submarkets in the country,” Benedict said in a HFF news release. “This transaction is a true validation to the exceptional impact that Fallon and Cornerstone have made on the city of Boston through the development of Fan Pier, which is one of the premier mixed-use developments in the city.”

Located at 50 Northern Ave. and 11 Fan Pier Blvd. on the waterfront in Boston’s growing Seaport District, the properties have ground-floor retail and share a 740-space underground garage. Fallon recently announced that Starbucks and child-care provider Bright Horizons were taking a total of 14,755 square feet at 50 Northern Ave. They will be joined by Committee, a restaurant that will be run by George Aboujaoude of Boston’s Cafeteria and Bijou Nightclub set to open in the fall. CBRE New England brokered the retail deals for Fallon.

Part of the $3 billon mixed-use complex in what is also called Boston’s Innovation District, development of the two interconnected buildings at Fan Pier began in June 2011. A month earlier Vertex had reportedly signed a 15-year lease for the properties for approximately $72.5 million a year. In February, Vertex held a formal ribbon-cutting for its new space.

Early last month, the Fan Pier developers announced they had received $204 million in construction financing to begin a 516,000-square-foot building at 100 Northern Ave. Goodwin Proctor L.L.P., an international law firm, has already signed on as the lead tenant agreeing to take 380,000 square feet in the glass tower, which will include 18,000 square feet of ground-floor retail. It is expected to be completed in spring 2016.

HFF secured the construction financing, provided by RBS Citizens, for the development of 100 Northern Ave.