Oxford Properties and JP Morgan sell Boston's One Memorial Drive for USD825.1m
Oxford Properties Group (Oxford), a global real estate investor, asset manager and business builder, and JP Morgan Global Alternatives, have sold One Memorial Drive – a fully leased, 409,422 square foot Class A office building in Cambridge, Massachusetts – for USD825.1 million.
The property was acquired by a joint venture between MetLife Investment Management and Norges Bank Investment Management.
The transaction, which values the property at over USD2,000 per square foot, sets a record benchmark for office product pricing in the Boston region. Attracting an array of bids across institutional, private equity and REIT capital, it reveals the depth of demand for well let, high-quality office product among institutional investors. Originally purchased by Oxford and institutional investors advised by JP Morgan Global Alternatives in 2014 as part of a multi-asset office portfolio, One Memorial Drive—primely located next to MIT’s campus—is 100 per cent leased to technology companies Microsoft and InterSystems.
“This transaction perfectly encapsulates Oxford’s investment and asset management strategy,” says Chad Remis, Executive Vice President, North America, Oxford Properties. “We acquired this property with high conviction in the market’s growth potential and an intention to enhance its value through our direct management capabilities. We took a creative approach to developing additional office space at the asset through the conversion of excess parking in the boutique tower, as well as securing long-term renewals by providing first-class service to the building’s customers.”
In 2017, Oxford increased the lettable area of the building by over 10 per cent by converting an entire floor of under-utilised parking space into office space which was then leased to InterSystems. Long-term renewals were also secured with the building’s occupants to drive net operating income over 55 per cent higher than at acquisition.
“The vision, actions and capabilities of our local team have created significant value at the property, successfully de-risking the asset. The sale of One Memorial Drive capitalises on the strong global institutional demand for prime office product and crystalises the value created at the asset by our team on behalf of our owner and co-investor. The sale allows Oxford to continue to diversify our US holdings and redeploy the proceeds to fund growth in the Boston market, where we continue to have a favourable long-term view. This growth includes our high-conviction thematic investing in life science, multifamily and logistics that we have undertaken in Boston as well as future opportunities in the local office market where we can create value,” adds Remis.
The sale of One Memorial was led by Eastdil Secured on behalf of Oxford and JP Morgan.