Boston Fan: EOP CEO Tom August

Bostons largest office landlord, EOP, would like to get even larger, but its moredifficult to find propertiesnow than a year ago. (Have the properties gotten better at hiding or did they all migrate south?)Its CEOTom Augusttells us as anopportunistic investor, he looks for value-add deals where an owner benefits from our ability to move fast. EOP buys subordinate debt, equity, and properties that need leasing. While it usually favors less than afive-year hold, its stretching that out in Boston, waitingfor a CBD vacancy of 10% or less. Among the 20M SF the company acquired last year was 125-150 Cambridgepark Dr in Alewife--once an outlier, now a mixed-use TOD. EOP has leased more than 170k SF since the '11 acquisition and has 90k SF available.

Before selling from its 12.5M SF Boston portfolio, which includes Rowe's Wharf (above, though the yachts are not included),Tomsays hed likeoccupancyat90% to 95%and continued improvement in the economy. While its taken longer than anticipated to bounce back from the recession, Boston and othercoastalcities--NYC, DC, and San Fran--are the mostresilientmarkets. These days,Class-A CBDBoston offices are selling for $500 to $600/SF (compared to replacement cost of up to $700/SF), with a leveragedIRR of 7% to 12%. In acquisitions, EOP istaking on more riskthan a year ago, Tom says, guessing on rising demand and seeing no new supply.

When's the last time your boss caught you giggling to yourself? Please send your news and ideas to Susan Diesenhouse,[email protected]