Japanese Billionaire Seen Buying Back Bay Office Buildings from Liberty Mutual Via Newmark

BOSTON—A Japanese billionaire circling Boston for real estate opportunities has landed a prized two-building Back Bay office package totaling 825,000 sf in a fast-paced process being conducted for Liberty Mutual Insurance Co. by Newmark’s Capital Markets team, industry sources are telling therealreporter.com. The insurer has owned 75 Arlington St. and 10 St. James Ave. since paying $481.5 million in January 2006. “It is under agreement to them,” a source familiar with the sale confirms of multiple claims Akira Mori and his Mori Trust Group have emerged as winning suitor, with pricing goals for the assets put at $650 million when the exclusive listing for Newmark was first announced barely three months ago.

Market watchers spoken to could not hazard a guess as to whether that level of pricing will be achieved, which if it does would put the per-sf rate above $785 and capitalization marks in the low 4 percent range, reflective of how well-regarded Boston is at present, say observers who add it also demonstrates that the Back Bay continues to be a popular destination for institutional and overseas capital despite rising vacancy rates and competition for the best tenants from the upstart Seaport District and Cambridge’s thriving Kendall Square.

Mori Trust is among a number of Japanese investment vehicles targeting American shores, the venue most popular over the past decade for Japanese real estate capital. A new CBRE global report says the US has held the top spot from Japan since 2007 in buying overseas real estate and the pace which has been on the rise since 2011 and hit $1.3 billion in 2014 is expected to continue rising on the strength of a strong economy promising higher yields than that which can be found in Japan.

Calls to Newmark’s Capital Markets team to discuss the status of its mammoth Back Bay assignment were not returned by press deadline. The contingent which is led by Robert E. Griffin Jr., Edward C. Maher Jr. and Matthew E. Pullen is quite adept attracting foreign investors to its assignments, in the latest instance pitting those groups against a number of well-heeled domestic institutional funds eager to grab a stake in one of the country’s most expensive office markets.

Akira Mori’s arrival to Boston is not a total surprise for industry experts who point to his declaration earlier this decade Mori Trust would spend upwards of $1.2 billion buying CRE offshore, citing London and New York City among its target cities. Since that time, Boston has emerged as a Tier One market in foreign investment activity, putting the Hub on a par with Gotham and Washington, DC. Mori Trust supposedly has been in the hunt on other prime Boston office buildings in circulation recently, although specific examples were not provided by multiple observers reporting such endeavors.

In the Liberty Mutual buildings at 75 Arlington St. and 10 St. James Ave., the 825,000 sf is concentrated in an assemblage close to the Boston Public Garden one block from Boylston Street and in an area where Liberty Mutual’s ascension to the world’s sixth largest property and casualty insurer began over a century earlier. A newly constructed tower at nearby 157 Berkeley St. made space the insurer occupied at 75 Arlington St. and 10 St. James Ave. less critical, the “prime reason”n cited in opting to peddle the buildings, a campaign launched in late summer through Newmark.

Ten St. James Ave. is the larger and newer of the buildings in play, its 19-story, 585,000-sf frame completed in 2001 and recipient of a LEED Silver designation in 2009 covering Existing Buildings. The 10-story 75 Arlington St. celebrated its 100th anniversary in 2013.