To read a related article about this proposed sale, click here.
"Boston Wharf has argued that some of these century-old buildings could be knocked down, clearing the way for taller and denser development in a section of South Boston that is evolving into a hot market for upscale condos and trendy offices, sources say." -- reported in Boston Herald, 10/3/03
Copyright 2003 Boston Herald
Boston Herald October 3, 2003
Fort buyer has sticker shock
First, $450M pact, then the questions
Author: SCOTT VAN VOORHIS
A New York company's $450 million-plus deal to buy and redevelop dozens of aged Fort Point Channel warehouses may be in trouble amid a dispute over the deal's outsized price tag.
Tishman Speyer Properties LP, headed locally by former Hub development czar Thomas O'Brien, wants to slash the deal's price after getting an inside look at the collection of 19th and early 20th century buildings, industry sources say. These sources say the firm contends that the price it agreed to is too high, considering the condition of some of the buildings, as well as the rental cash flow they produce and their redevelopment potential. Tishman wants to shave the price by tens of millions, but Boston Wharf is balking, sources say.
Some observers suggest that the much-hyped deal could be headed off the rails. After reaching a tentative agreement this summer, Tishman and Boston Wharf had planned to wrap it up this fall.
"I think it's still very open," said waterfront observer Vivien Li, of the Boston Harbor Assocation. O'Brien and Boston Wharf officials could not be reached for comment. A Tishman spokesman declined to comment.
One area of sharp disagreement between the two firms is the redevelopment potential of the 44 warehouse and industrial buildings that Tishman would buy, sources say. Boston Wharf has argued that some of these century-old buildings could be knocked down, clearing the way for taller and denser development in a section of South Boston that is evolving into a hot market for upscale condos and trendy offices, sources say. Wharf company executives have pointed to the potential for new development on the increasingly valuable property to justify the deal's price.
But Tishman has argued that such wholesale leveling is not realistic given potential opposition from Southie elected leaders and activists, sources say. Many of the warehouse buildings are used by artists attracted by cheap rents and loft-style spaces; but artists aren't expected to support major rehabs and higher rents. Tishman has argued that such redevelopment may work for only a few properties, sources say. The two sides are also said to be bickering over what the warehouse buildings are actually worth now, before any improvements. After the two sides came to a tentative sales agreement, Tishman began a long process of detailed inspection, looking at Boston Wharf's books as well as the buildings themselves.
Tishman is now arguing that rents the buildings generate don't support the deal's original price, sources say. And O'Brien, the former Boston Redevelopment Authority director who heads Tishman's Boston office, may also be pointing to falling commercial rents in the channel area. Tishman is "taking a much more conservative approach," said one source familar with the situation.
Copyright 2003 Boston Herald
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