IBM at Beacon Square
In late September 2001, Falcon Real Estate Investment Company completed the acquisition of the newly constructed IBM office building in Boca Raton, Florida. IBM consolidated three South Florida offices and over 1,000 employees to this location. The ten-year lease with IBM Inc. was triple-net, and had a 12.5% rent increase after five years. The tenant had two renewal options at 95% of fair market value. The property was strategically located at the intersection of Interstate 95 and Congress Avenue in Boca Raton. IBM had a long history in Boca Raton, and developed the nation’s first personal computer at its previous campus location in that city. This was a particularly difficult transaction since the closing of the purchase was scheduled for two weeks after the 9/11 tragedy. However, with the cooperation of all parties, particularly including IBM, the purchase was successfully completed. The purchase price was $33.8 million, with $19 million of mortgage financing. The IBM Building was sold in June 2009, in the midst of the severe real estate recession at that time, at a price of $42.3 million equal to an Internal Rate of Return of 8.47%.