Murdoch’s $200M parking lot: Exit plan murky for bold development move

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Global news baron Rupert Murdoch, possibly as soon as today, will become one of the most important landowners in Boston.
Longtime parking king Frank McCourt is “selling” his coveted lots on South Boston’s waterfront — one of the top development sites in Boston — to a unit of Murdoch’s News Corp.
When the deal closes, McCourt will have paid off the mountain of money he borrowed from News Corp. — having bought the Los Angeles Dodgers from the media giant, with a generous financial assist, two years ago.

Good for McCourt.
After all, despite how this “sale” looks, he gets to keep the Dodgers — and the hundreds of acres of downtown L.A. land the team controls.
But it may be more of a mixed bag for News Corp.
For the media conglomerate may find itself with a major league financial headache as it tries to unload its newly acquired development land near Pier 4 and the World Trade Center.
No one is arguing McCourt’s land isn’t worth a small fortune.
But possibly not quite the $200 million-plus that News Corp. is likely to pay — on paper, anyway.
You will be hard-pressed to find a big-time Boston developer who would write a check for that number.
First, a little background.
The word “sale” is in quotes for good reason. McCourt had offered his land as collateral back in 2003 when he bought the Dodgers, pledging his Southie lots to secure financing from News Corp.
The longtime waterfront parking king got his money — and a two-year deadline to pay off his debt.
That window is now closing, but no buyers have stepped up with the kind of cash that McCourt needs.
Enter News Corp. and its deal to “buy” McCourt’s land.
Sometime in the next few days, News Corp. will find itself facing an untypical challenge for a media giant: How to unload a grossly overpriced piece of real estate.
Don’t take my word for it.
Just listen to one of the potential buyers of those 24 acres that News Corp. may soon have to unload.

“I think it’s a big stretch,” argued John Hynes, a longtime Hub developer who recently built State Street’s new tower headquarters near South Station.
To make his point, Hynes points to the blockbuster Fan Pier development site, which sits directly on the harbor in front of McCourt’s land.
Fan Pier, sold recently for $115 million, is about the same size, but with twin advantages of a waterfront perch and a city- and state-approved $1.2 billion building plan.
Said Hynes, “Someone would have to explain to me how 20 acres at Fan Pier is worth $100 million and . . . their 20 acres across the street is worth $200 million.”
“I don’t see it happening,” he said.

http://business.bostonherald.com/realestateNews/view.bg?articleid=122146

 

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Murdoch to build in Hub

Global news mogul Rupert Murdoch will soon become the newest power player on Boston’s development scene.
Murdoch’s News Corp will build out, rather than immediately sell, a key tract of waterfront land that it’s poised to acquire from long-time South Boston land owner Frank McCourt, according to a News Corp. executive.
The deal could close in a matter of days.
“The first thing we’ll be doing is contacting City Hall,” said the News Corp. executive. “It’s a great city and a great site for potential development.”
McCourt pledged his land as collateral two years ago in exchange for $145 million in financing from Murdoch’s News Corp. The loan helped cement a blockbuster deal under which McCourt bought the Los Angeles Dodgers from the company’s Fox Entertainment Group for $421 million.
Now News Corp is close to taking title to McCourt’s land for roughly $145 million in a deal that is being structured as a sale. That will give Murdoch’s News Corp. 24 acres of parking lots near Pier 4 and Fan Pier — land considered to be some of the most valuable acreage on the East Coast and key to Boston’s development future.
Murdoch’s real estate move, in turn, could trigger some intense jockeying among local developers as well.
News Corp. is expected to bring on a development partner to build out the land. And a number of local builders having already looked closely at the site.
Likely to be in the hunt are a who’s who of top developers, including John Hynes of the Gale Co., builder of State Street’s new tower near South Station.
Any development effort, however, could take years. While McCourt touted his land’s potential, he never drew up a formal development plan for review by city and state regulators.

http://business.bostonherald.com/realestateNews/view.bg?articleid=127413

 

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Hello, Mr. Murdoch-Do you mind if we put you on hold?

Global news titan Rupert Murdoch, welcome to the wonderful world of development - Boston style.
Murdoch’s News Corp. is expected as soon as today to close a deal for a key stretch of waterfront land. And City Hall is already signaling that it will require an extensive review before it will approve any new development.
Mark Maloney, director of the Boston Redevelopment Authority, wants to “master plan” the 24 acres of land in the heart of South Boston’s waterfront that News Corp. is taking title to.
That, in turn, could mean a long wait for News Corp. as it seeks to push ahead with the development of one of the most valuable tracts of real estate on the East Coast.
This welcoming salvo from City Hall comes as Murdoch’s media and entertainment empire takes over the key development site from long-time Southie real estate and parking king Frank McCourt.
Unfazed, News Corp. has pledged to meet the city’s requirements and to create a landmark project on the site.
News Corp. is expected to capitalize on its newest asset, with plans to seek a development partner to build out the tract of parking lots near Pier 4 and Fan Pier.
“Our interests are completely aligned with those of City Hall,” said Andrew Butcher, a News Corp. spokesman. “We want to develop a comprehensive plan so that this area becomes a great asset for us and for the people of Boston.
“Our history shows we are not a company that does things by halves,” he added.
Still, City Hall’s desire to do a master plan for the so-called McCourt site could come at a price based on the most valuable commodity in the development world - time.
The site has the potential to accomodate as much as 2 million square feet of housing, office and hotel high-rises - enough to pack two Prudential towers.
Overall, it could take two years for City Hall to draw up a comprehensive plan, which would lay out how much could be built, how high it could rise, and where.
And that would be on the fast side.
“A year or two would be optimistic,” said Vivien Li, head of the Boston Harbor Association.
“It’s going to be a long, complicated process before they even see a shovel in the ground,” she said.
Supporters of such planning say it is needed to ensure that the buildout of Southie’s waterfront, already targeted for a series of high-profile projects, doesn’t degenerate into a snarl of traffic jams and a jumble of high-rises without any green space.
But real estate executives point to a similar master planning process that City Hall orchestrated at the Fan Pier development site, just across Northern Ave.
It took the Pritzkers, a billionaire Chicago hotel family, years to nail down a plan for a $1.2 billion development on that site. And by the time it was complete, the latest recession had already set in.
“We have learned through history that sometimes going through that process can take a long time and you can miss the market,” said David Begelfer, head of the local chapter of the National Association of Industrial and Office Properties.
News Corp. is taking over the McCourt’s land in a complex, $145 million transaction that has roots in McCourt’s acquisition two years ago of the Los Angeles Dodgers from the media company. McCourt used his land as collateral to obtain a loan of roughly the same amount from News Corp., which then sold the team to McCourt.
Under the deal, McCourt had two years to pay off his loan, through a land sale or other means, but he was unable to nail down a buyer. Still, the transaction is being structured as a sale, not a foreclosure, executives close to the deal have said.
Meanwhile, the deal marks the end of an era in Boston development, signaling the departure of McCourt after two decades as a key - but quixotic - player on Boston’s development scene.
The son of a local construction magnate, McCourt acquired his land from a railroad company in the 1980s in what was then a sleepy stretch of harborside dominated by rundown piers, parking lots and a few marquee restaurants.
But as interest in developing this valuable waterfront land grew, McCourt frustrated city officials with years of grand plans that went nowhere.
That cycle of frustration may be finally poised to end, with News Corp., a corporate behemoth with deep pockets, signaling a desire to move forward with construction.
Still, city officials are already framing the terms when it comes to the future of the sprawling site.
“I would hope they would move quickly and continue to think about planning the whole property,” said Maloney.

http://business.bostonherald.com/realestateNews/view.bg?articleid=128166