Candler Building is bought by Boston firm for $65 million

Downtown office building becomes second sold this week to investors

January 30, 2003|By Meredith Cohn | Meredith Cohn,SUN STAFF

One of Baltimore's largest office buildings, the Candler Building at 111 Market Place, has been sold for about $65 million, adding another to the list of local properties scooped up by investors eager for stable returns.

The deal's broker said yesterday that the building was bought by HRPT Properties Trust, a Boston real estate investment trust. It's the second property in the city bought by the trust, which also owns one of the towers at 100 S. Charles St.

Though the price was more than the $50.2 million commanded by the 25-story First Union Tower at Light and Baltimore streets that was sold this week, it was less per square foot - $116 vs. $132. The building's average rental rates, at about $21 a square foot, are also about $3 less than those at the First Union building.

But it is still a relatively high price in a weak economy in Baltimore, said Philip C. Iglehart, the deal's broker and managing director and principal at Colliers Pinkard commercial real estate company.

It is also well above the Candler's assessed value of $47.8 million, according to state land records.

The 1911 building had generated offers from 14 companies since it was put up for sale Nov. 1 by its owner, Boston Properties, Iglehart said.

"Properties like Candler on Pratt Street and facing the Inner Harbor today, vs. maybe five years ago when they used to be at the eastern extremity of the central business district, are in the middle of things. With all the activity on Market Place, and the movement east around to Fells Point and Canton, now it's poised to be in the middle of the action," said Iglehart, explaining the interest in the building.

He said the 550,000-square- foot building might have generated even more interest if the building had parking attached.

The allure was the tenants, Iglehart said. The building is 97 percent occupied with tenants including Sierra Military Health Services Inc., the Johns Hopkins University, Constellation Energy Group Inc. and Aon Corp.

"The sales are driven by good credit tenants and in-place income," Iglehart said about the tenants who have long-term leases that guarantee income to landlords for an extended time. The building could generate returns above 9 percent - a safer bet for investors than the stock market in general, he said.

Boston Properties has been selling properties to help pay for its $1.06 billion purchase of Citigroup's headquarters on Park Avenue in New York. It also sold three other buildings, and by reinvesting immediately, avoided federal taxes.

Boston Properties also owns 100 E. Pratt St.

The buyers and the sellers could not be reached for comment last night.

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