Re: Filene's
Filene's Developer Hynes Leaves Gale International
By Paul McMorrow
Banker & Tradesman Staff Writer
Yesterday
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http://www.bankerandtradesman.com/news138737.html
Developer John B. Hynes III has split from Gale International, but his new firm will continue to push ahead with its two marquee Boston development projects, Seaport Square and One Franklin.
Gale International's overseas development arm, under Gale chairman Stan Gale, has split from the firm's former U.S. operations. Hynes's new firm, Boston Global Investors, retains its equity and development stakes in those domestic projects.
Hynes, who will act as BGI's CEO and managing partner, said he decided to leave Gale and form BGI because Gale International's business had been pulling him and Stan Gale in opposite directions. Before 2007, Hynes said, he was primarily focused on New Songdo City, a massive Korean mini-city. In 2007, after Gale International sold its New Jersey holdings to Mack-Cali Realty, Stan Gale took a leadership role in Korea, while Hynes focused on Filene's and Seaport Square.
"It was a natural progression of the business," Hynes told Banker & Tradesman. "Korea is now rolling. My job there was in master planning and deal formulation, upfront structuring. Korea is now primarily project management and marketing, and that's not where I need to be. I need to make a commitment to Morgan Stanley at the Seaport, and to Vornado and JP Morgan at Filene's. Those are two pretty important projects, and I want to focus on them."
BGI, Hynes said, will allow him and Gale "to align our activities and interests." Hynes still owns half of New Songdo City and will travel to Korea quarterly, but he bought out Gale's interests in Filene's and Seaport Square. Hynes also said forming the new firm has allowed him to elevate some longtime coworkers, who have been with him since the development of State Street Financial Center, to partners. Hynes will be joined by five directors at BGI: Kevin R. Benedix, Charles D. Reid, Leonard Conlin, Dave Wamester and Joseph M. Norris.
The deal to buy out Gale's interest in Filene's and Seaport Square closed late last week, Hynes said.
The split comes at a critical juncture for Hynes and Boston Global Investors. Hynes is trying to resuscitate One Franklin, the redevelopment of the former Filene's complex, while simultaneously permitting Seaport Square, a 33-acre, 6.3-million-square-foot development project along the South Boston waterfront.
Banker & Tradesman reported last week that Hynes hopes to break ground on 1 million square feet of residential construction at Seaport Square in 2011.
Gale, in partnership with Vornado Realty Trust, JP Morgan and Mack-Cali Realty, acquired the Filene's building in Downtown Crossing for $100 million in cash in January 2007, and began demolition in February 2008. Work on the planned $700 million One Franklin tower stalled that autumn. This past March, Boston Mayor Thomas Menino threatened to seize the Filene's site through eminent domain if the project's developers could not restart construction. Vornado CEO Michael Fascitelli subsequently reaffirmed his company's commitment to the One Franklin project.
"I don't have a crystal ball, and if I did, I'd be wrong anyway," Hynes said, saying three years ago he thought he would be opening One Franklin this year. He said capital markets have shifted significantly, to the point where interested capital sources are contacting him again. "In 2008 and 2009, we couldn't' even get a meeting with a lot of people. They would say, ?Real estate construction? Are you kidding me?' Now it's a different environment, and we're cautiously optimistic."
Hynes said he now hopes to restart construction at Filene's before the end of the year.