1 South St. might be offered in portfolio sale REIT is likely to buy Alex. Brown Building

Real estate

May 30, 1998|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

The New York investment company that bought the Alex. Brown Building for $80 million in March is working to sell the skyscraper as part of a potential portfolio sale of real estate assets, sources said.

The Blackstone Group's decision to sell the 30-story office tower at 1 South St. comes amid a flurry of sales of signature downtown buildings, including 100 E. Pratt St. and 250 W. Pratt St.

As in the case of the 28-story 100 E. Pratt and the 26-story 250 W. Pratt, the likely buyer of the Alex. Brown Building would be a real estate investment trust, industry experts said. REITs are publicly held companies that are exempt from corporate income tax and have access to lower-interest Wall Street capital.

Last year, REITs bought a record $47 billion worth of commercial property, according to figures compiled by CB Commercial Real Estate Group Inc.

"Most of the portfolio sales that have been conducted recently have been REIT-driven, because that's how they grow their asset base," said Richard P. Manekin, a CB Commercial senior vice president.

"And Blackstone recognizes that by including the Alex. Brown Building in a bulk sale, they are adding quantity at a time when there's a premium being paid for quantity, especially quantity that has quality," Manekin added.

Blackstone, a 13-year-old investment firm that controls about $4 billion worth of real estate in the United States and Europe, did not return telephone calls for comment on the possible sale.

That REITs are hungry to increase their portfolios might not be the only reason Blackstone might be trying to unload the Alex. Brown Building.

The decision to sell the 450,000-square-foot tower might also stem from the building's limited potential for rent increases, at least in the near future.

The skyscraper's main tenant, BT Alex. Brown Inc., occupies slightly more than 60 percent of the space there in a lease that runs through 2012.

Pub Date: 5/30/98

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