This topic is now archived and is closed to further replies.


State Street Bank Story

2 posts in this topic

I didn't know 1 lincoln had trading floors.

State St. up for second bid: One Lincoln Place may yet be firm's

By Scott Van Voorhis

Thursday, January 22, 2004

State Street Corp. appears to be the one to beat in the bidding war for the new 36-story tower near South Station that bears the local financial titan's name, industry observers say.

The tower's developer, New Jersey's Gale Co., wants offers by the end of the week for the 1 million-square-foot tower, which took its place on the Hub skyline last year.

While State Street came up short in an initial bid for One Lincoln Street, the company may be poised to submit another bid - or team up with another contender for the tower, observers say.

Several other major development and real estate firms are expected to submit offers to buy the tower, with the ultimate sales price potentially topping a whopping $600 million.

But State Street, which already has a lease for the entire tower, may have more of an incentive to move into the owner's suite than others competing to buy the high-rise, observers say. The tower was renamed State Street Financial Center over the summer, although the One Lincoln name is also still being used by the tower's owner.

State Street, even in a deal in which it shares ownership, could gain leverage to change the tower's lease terms in its favor. That could mean significant savings on a deal that costs the company tens of millions a year in rent.

``They have some unique reasons to buy,'' said one local real estate sales executive.

If State Street pulls the trigger and buys One Lincoln, there is also speculation that the company will make the high-rise its official headquarters. The company's top executives hold court at State Street's longtime nerve center, the 34-story 225 Franklin St. tower that is topped by the high-profile State Street sign.

State Street's new digs offer some amenities the older tower doesn't, which could factor into any decision. For instance, the new building houses exercise facilities not found at 225 Franklin St.

Moreover, State Street, whether it buys the tower itself or teams up with another bidder, may want a say in appointing the management team to run the high-rise. The tower, which is in the process of being occupied by thousands of State Street employees, includes specially fitted multistory trading floors.

Whether State Street will try to buy the tower on its own, or team up with another real estate firm in return for a partial ownership stake remains to be seen.

State Street made an intial offer for the tower late last year, acting on a provision in its lease that gave it first crack at a deal.

While strong, State Street's offer fell short of the more than $600 million that Gale has sought, observers say.

Under the bidding rights State Street obtained in its lease, a competing bidder would have to best State Street's initial offer by tens of millions to pull down the deal, industry observers say.

But with dozens of inquiries and solid interest, John Hynes, a top Gale executive who oversaw the development of the tower, does not foresee a problem.

``We have to beat the State Street price, and I am confident we will be able to do it,'' Hynes said.

``State Street has clearly expressed an interest in staying involved, and we are interested in keeping them involved in any new transaction that is proposed,''he said.

Share this post

Link to post
Share on other sites

  • Recently Browsing   0 members

    No registered users viewing this page.