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One Financial Plaza selling for $46.2 million

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Rhode Island's tallest building is being sold again

BY DAVID McPHERSON Journal Staff Writer | January 14, 2005

PROVIDENCE -- For the second time in less than two years, downtown's tallest office building is changing hands.

Gilbane Properties today expects to close on the sale of One Financial Plaza for $46.2 million to a partnership that includes a General Electric pension subsidiary.

GE Asset Management and partner Commonwealth Ventures take control of a refurbished office tower that is nearly 90 percent filled with tenants signed to long-term leases.

"It's clearly a great asset, the tallest building in Rhode Island," said Commonwealth Ventures president Richard Galvin. "It's got a great tenant base, a terrific location in the core of Providence, and it's one of the premier buildings in New England."

Commonwealth Ventures is a Southport, Conn.-based real estate firm that is the developer, with USAA Real Estate Co., of the new GTECH Holdings Corp. headquarters being built in Providence.

Commonwealth's partner in the One Financial Plaza purchase, GE Asset Management, is a pension fund adviser that manages more than $170 billion in retirement money for the GE pension fund and other institutional investors.

Gilbane Properties -- the real estate development arm of the Providence-based construction firm Gilbane Inc. -- bought One Financial Plaza in May 2003 from FleetBoston Financial Corp.

It was part of a package deal that included the adjacent 15 Westminster St., the old historic Rhode Island Hospital Trust headquarters that is now being converted into student housing for Rhode Island School of Design.

Gilbane Properties paid Fleet $48 million for the two properties.

The 29-story, 322,000-square-foot One Financial Plaza, with a white facade, was built in 1972.

A partnership that includes a General Electric pension subsidiary and a Connecticut real estate developer is purchasing the One Financial Plaza office building downtown, above, $46.2 million.

Just a couple of years ago, he said, institutional investors such as GE Asset Management showed little interest in Providence.

"One major transaction that changed things quite dramatically was the purchase of the Providence Place mall," Gilbane said.

The Rouse Co. of Baltimore bought the mall from its original developers in April for $510 million. Rouse has since been acquired by General Properties Inc. of Chicago.

Institutional investors, Gilbane said, took note of the Providence Place deal and the construction of the new GTECH headquarters across from the mall.

That attention, coupled with increased real estate investment by pension funds, created strong demand for One Financial Plaza, he said.

"We were perfectly comfortable owning this building long term," Gilbane said.

Keystone Realty Capital represented Gilbane in the deal. C.B. Richard Ellis also assisted Gilbane in the sale.

For Gilbane, the sale means a hearty profit in what had been a complicated real estate deal. The company's return in One Financial Plaza cannot be measured precisely because it was part of a larger package in the deal with Fleet.

The original two-building purchase from Fleet amounted to about $85 per square foot, compared with about $143 a square foot in the sale of One Financial Plaza to Commonwealth Ventures and GE Asset Management.

To put that in perspective, Inland Real Estate Acquisitions of Chicago paid $61 per square foot -- $21.3 million in total -- for Fleet's former headquarters at 111 Westminster St. in April 2003.

Since taking over One Financial Plaza, Gilbane has renovated the building, separated its mechanical systems from the structure next door and signed tenants to long-term leases that proved attractive to the buyers.

The five major tenants are Fleet's purchaser, Bank of America, plus Sovereign Bank, the law firms Edwards & Angell and Holland & Knight and the brokerage firm Morgan Stanley.

The building is 87 percent occupied, Gilbane said.

Next door, Gilbane is renovating the original Rhode Island Hospital Trust building. RISD has signed a long-term lease on it with an option to buy.

The conversion into housing is expected to be completed by the summer, in time for students to move in for the fall semester.

From The Providence Journal

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Landmark Deal

Hot market prompts Gilbane to sell One Financial Plaza while investing in RISD housing

By Laura Ricketson, Staff Writer | 01/29/2005

When Gilbane Properties paid $48 million in cash for two buildings in Providence

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