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HANOVER-BACKED GROUP COMPLETES PURCHASE
By Lisa Eckelbecker TELEGRAM & GAZETTE STAFF
WORCESTER — A development entity financially backed by Hanover Insurance Group Inc. has completed its purchase of downtown properties that are slated to become part of CitySquare, a proposed development of offices, stores and housing.
CitySquare II Development Co. LLC today acquired several parcels covering nearly 11 acres from Berkeley Investments Inc. of Boston for $5 million and secured options on other parcels, according to records filed with the Worcester County Registry of Deeds.
The transaction gives CitySquare II, a development entity managed by Boston-based Leggatt McCall Properties and financially backed by an investment arm of Worcester-based Hanover, control over about half of a 20-acre project that had stalled in recent years.
"I look at this as a catalytic investment and a good way to drive a lot of the investment downtown," said Frederick H. Eppinger, Hanover president and chief executive. "Because we know the city so well, we know what's going on, we know where the opportunities are — it just felt good to me."
Under the deal, CitySquare II takes over vacant portions of the former Worcester Center Outlets mall and a parking garage along Foster Street.
Berkeley Investments retains ownership of a 20-story office tower at 100 Front St., a two-story building at 90 Front St., a nine-story office building at 120 Front St., a 1,454-space parking garage at Foster and Commercial streets and parcels that will allow it to develop about 200,000 to 300,000 square feet of new space.
Plans for the property are not fully defined, and Mr. Eppinger said he could not yet say how much money might be invested in redevelopment of the area. Mr. Eppinger said he supports Berkeley Investment's original objective of bringing "mixed use" to the area but that the new development team will likely try to accelerate street work earlier in the process to reconnect downtown to the Shrewsbury Street corridor and will collaborate with the city on how downtown revitalization can positively impact neighborhoods.
"I agree with the general premise, the overall program" of Berkeley Investments' previous plan, Mr. Eppinger said. "We're going to come back with a more refined plan."
Berkeley Investments proposed CitySquare in 2004 when it acquired the former Worcester Center Outlets mall, the office towers on Front Street and the nearby parking garages.
Plans for the proposed $563 million development, which included about $93 million in public money for new streets and infrastructure, called for tearing down the moribund mall and constructing new streets, 650 housing units and more than 1 million square feet of space for stores, offices and other commercial uses.
Yet as the years passed, no new development appeared. Then last year, Berkeley Investments approached Hanover as a possible investor. Hanover instead agreed to a sale.
"We originally brought Hanover in as a potential partner," said Barbara Smith-Bacon, vice president of Berkeley Investments. "When we decided to go our independent ways, it was simpler to do this as a straight sale. It was our choice to retain our properties."
In January, the newly created CitySquare II entity signed a purchase-and-sale agreement with Berkeley Investments. The investor in CitySquare II is Opus Investment Management Inc., a subsidiary of Hanover Insurance.
More recently, CitySquare II agreed to lease a 200,000-square-foot building that will be constructed on Foster Street to the Worcester operations of Unum Group, a disability insurer based in Chattanooga, Tenn. The 17-year lease includes parking garage space for 860 vehicles.
The lease with Unum triggered the release of about $35 million in public money for work at the CitySquare site, according to city officials. City Manager Michael V. O'Brien has said he expects demolition of old buildings at the site to begin soon after CitySquare II closed its deal with Berkeley Investments.