Downtown Crossing, Boston

Assignment

In 2012, FinanceBoston was engaged by a Boston based developer to provide the capital for a recently entitled mixed use residential development in a former retail building, located at Downtown Crossing, in Boston. The project qualified for Federal and State Historic Tax Credits. A tenant had not yet been secured for the retail component of the project and the Millennium Tower, which helped to revitalize Downtown Crossing, had not yet been announced. The construction lending environment in Boston was challenging, to say the least.

Approach

After attempting and failing to sell the permits for market value, the developer decided to redevelop the building and stabilize it. FinanceBoston approached the project holistically and determined that a joint equity partner could be secured to provide capital and balance sheet to help with construction loan. Due to a weak dollar and an outsider’s perception of Downtown Crossing being a prime location, a European joint venture partner was introduced. FinanceBoston secured the construction loan from a syndicate of lenders, led by a Worcester based lender.

Results

The developer, the joint venture partner, and the lenders agreed to a structure, which facilitated the use of the Historic Tax Credits. Construction was completed by 2014, a credit tenant was secured for the retail component, and the residential units were quickly rented. Shortly after stabilization, the Historic Tax Credit allowed for the repatriation of approximated half the equity invested. Subsequently, the Millennium Tower and other new developments have led to a significant increase in real estate values at Downtown Crossing. The developer and joint venture partner are happy that they decided to develop and hold what is now a ‘trophy asset.’