Oxford Properties Group is expanding its Boston portfolio with its $114.5 million acquisition of 745 Atlantic Ave. from Beacon Capital Partners.
The deal comes about six months after Oxford, the real estate arm of Canadian pension fund OMERS, invested a reported $2.1 billion to acquire four properties in Boston and Cambridge. And it marks another significant foreign capital investment in the Greater Boston real estate market, a trend that has dominated much of the industry in the past year.

Located across the street from South Station in downtown Boston, 745 Atlantic is an 11-story, 174,231-square-foot building that’s fully leased to tenants including WeWork, which provides shared office space for startups, and Cambridge Consultants, a global product development and technology consulting firm.
“It really fits our profile of what we like to buy for the long-term: Class A assets in downtown cores near transit-oriented locations,” said Chad Remis, the head of Oxford Properties’ Boston office.

Just last year, Oxford Properties acquired 60 State St. and 225 Franklin St. in Boston and One Memorial in Cambridge with JP Morgan Asset Management. It also independently acquired 125 Summer St., which has since become its corporate headquarters in Boston. Those properties, along with 745 Atlantic, give Oxford Properties a local office footprint of about 2.9 million square feet.

Its $114.5 million acquisition of 745 Atlantic, which closed May 29, is more than double the $54.65 million sale price 745 Atlantic fetched in 2003. The property sold again in 2008 as part of a $1.7 billion office property acquisition invovling Beacon Capital Partners and Charter Hall Office REIT of Sydney, Australia.

At that time, 745 Atlantic was fully leased to storage and information management services firm Iron Mountain (NYSE: IRM). In 2012, Iron Mountain announced it would relocate to One Federal St., a move it completed last year, leaving 745 Atlantic fully vacant.

Those factors, combined with Beacon Capital’s $30 million investment to reposition and renovate 745 Atlantic, make it an “idiosyncratic” asset, Remis said.
“It’s not a clean comp relative to the 100 percent leased building that I have today,” he said.
But Beacon Capital’s work to reposition and re-tenant the building created a solid investment opportunity, Remis said. Pension funds are structured with cash inflows, which fund the pension, and outflows that pay pension owners on an annual basis. From Oxford Properties’ perspective as OMERS’ real estate arm, a 100 percent leased asset like 745 Atlantic creates a reliable cash flow and return for its parent company.

“It is great when we have great clarity into our recurring income,” Remis said. “An asset like 745 Atlantic, which has a 13-year weighted average lease term and is 100 percent leased today, is really helpful, because we can forecast what those income levels look like in our business for the next 10 years.”
Oxford Properties is continuing to look for investment opportunities in the Boston market, Remis said.

“Our presence in Boston, I would say, is not finished,” Remis said. “We plan to be in Boston forever. Oxford has never left a city that it’s entered, and we’ve obviously enetered this one in a meaningful way.”
JLL was the exclusive sales agent for 745 Atlantic.

From: http://www.bizjournals.com/