Boston Properties, Inc. (NYSE: BXP), a real estate investment trust, announced that it has entered into a binding purchase and sale agreement to sell a 45% interest in the ground leasehold interest and related tax credits in Times Square Tower to an affiliate of Norges Bank for a gross purchase price of $684 million in cash. The property is unencumbered by debt. Boston Properties and an affiliate of Norges Bank will form a joint venture upon closing, and Boston Properties will retain property and leasing management for the venture.
The closing is subject to customary closing conditions and there can be no assurance that the sale will be completed on the terms currently contemplated or at all. Assuming the closing occurs as contemplated, the Company currently expects that it would distribute at least the amount of proceeds necessary to avoid paying a corporate level tax on the gain realized from the sale.
Times Square Tower is a 1,246,000 square foot, Class A office tower, including associated retail space and signage, located in the heart of Times Square in New York City. It was developed by Boston Properties and completed in 2004, and it is currently 99% leased. The property is subject to a ground lease with The City of New York with 76 years remaining, and it benefits from a Payment In Lieu of Taxes (PILOT) program through June 2024. The joint venture will hold the contractual right to purchase the fee interest in the property beginning in July 2024.
Boston Properties’ Executive Chairman, Mortimer B. Zuckerman, commented, “We are extremely pleased to form a new and important relationship with such a strong and reputable organization as Norges Bank, while at the same time once again demonstrating our ability to create and realize value for our shareholders through our development and management expertise.”