Paul McMorrow, of Banker & Tradesman, discusses how Boston Properties has been using more equity than secured real estate debt to fund its commercial development, including the Russia/Atlantic Wharf development.
“Boston Properties made headlines in April when it managed to extract, from some decidedly icy credit markets, a $215 million construction loan for its Russia Wharf office tower. The fact that the giant office landlord has yet to touch a cent of that loan shows how drastically commercial real estate finance has changed in the past nine months.
Boston Properties raised $860 million in new equity in a June stock sale, and borrowed another $700 million in an October bond sale. Mike LaBelle, the company’s CFO, said the unsecured bond offering was intended to be smaller, but grew by 40 percent because of strong demand from the investor market. Boston Properties’ all-in costs for that offering were under 6 percent. Fourth quarter balance sheets show $1.45 billion in cash and cash equivalents sitting in Boston Properties’ coffers.”