In the wake of the Global Financial Crisis, we targeted opportunities to acquire deeply discounted mortgage-loan positions secured by well-located real estate, with the plan to either hold the debt until repayment by the borrower or take ownership via foreclosure or a negotiated deed in lieu of foreclosure transaction.
In May 2012, we acquired the mortgage note on 24 Farnsworth, an underperforming 74,554-square-foot, six-story brick-and- beam office building in the Boston Seaport District.
Given the building’s seaport location, the property was well positioned to attract a broad range of office users looking for a dynamic, urban neighborhood setting.
At 14.5 percent leased when we bought the mortgage note, we saw a pathway to acquiring the fee interest and pursuing a capital-improvement plan that would support leasing up the building at market rents.
Execution
After acquiring fee interest in the building, Davis signed a lease with a marketing firm for 24,562 rentable square feet, bringing the building to nearly 50 percent occupancy.
Davis pursued a capital-improvement plan, exposing the building’s original brick and beam structure to reflect the Seaport District’s historic identity.
Within 10 months following the mortgage-note acquisition, the team brought the building to full occupancy when the Unitarian Universalist Association (UUA) agreed to move from its longtime headquarters buildings in Beacon Hill to 24 Farnsworth.
UUA signed a new 10-year “as-is” lease for the remaining three floors in the building with an option to purchase the building from Davis, which it exercised in January 2015.
