REIT news

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REITs (real estate investment trusts) own much of the commercial real eatate in the US and are very instrumental in commercial (i.e. office) develpment. I think it would be interesting to have a thread on these companies and their activities. Here's a story of an Atalnta based REIT buying a just finished, fully leased building in Boston. Regular people can invest in REIT's and in effect own part of highrises.

State St. HQ One Lincoln eyed by Atlanta REIT

Bill Archambeault

Journal Staff

Wells Real Estate Funds Inc., an Atlanta area-based real estate firm, has emerged as a strong candidate to buy One Lincoln St., the 1 million-square-foot office building leased entirely by State Street Corp.

The Gale Co., the Florham Park, N.J.-based developer, is taking offers on the building, which is set to open officially later this year. Interest is expected to be strong among investors, although some will likely be deterred by the $600 million to $700 million price tag and the small returns expected. In exchange for a low rate of return, however, the property promises long-term, almost guaranteed, returns over the length of State Street's lease.

State Street signed a deal in 2001 leasing the building's entire 1 million square feet for an average of nearly $60 a square foot, at a time when rents were climbing as rapidly as options for office space were dwindling.

The leasing arrangement gives State Street the right of first refusal to buy the building, but industry experts are speculating that State Street won't bite, given current economic conditions and the sale price of the property.

"You never know, but given the premiums someone's going to pay for their credit and term, they probably have something else to do with their capital," said Lisa Campoli, co-head of Meredith & Grew Inc.'s capital markets group.

Both Wells and State Street declined to comment on the sale. But if State Street isn't interested, Wells appears to be. The real estate investment trust focuses on high-quality properties leased to tenants with a minimum net worth of $100 million. It secures long-term leases at the time of the deal to ensure consistent returns.

"That's exactly the type of property they've been looking for since they've been in the market," Campoli said. "It's not a large investment return, but it's very stable."

Wells in July 2001 bought 1200 Crown Colony in Quincy, a suburban office building leased to State Street, for $52 million from Nordic Properties, the investment arm of Burlington-based Nordblom Co.

Wells, of course, may not be alone in finding One Lincoln appealing, and interest is expected to come from overseas. The return potential and the stability should appeal to German investment funds, for example, which often have low yield requirements on properties with long-term leases.

"There are very few transactions that compare to this. It's once in a generation that something of