With $700M Deal, UCLA Will Establish Biotech Hub At Former Westside Pavilion Mall
With the $700M acquisition of the former Westside Pavilion mall, UCLA will establish a major research facility housing a newly created immunology center and the university's quantum science center.
The deal, aided by a $500M investment from the state of California, also releases Google from an unwanted lease and frees Hudson Pacific Properties from $326M in debt.
Gov. Gavin Newsom and UCLA leadership announced Wednesday that the 587K SF former mall, remade into Class-A office space called One Westside, will become the UCLA Research Park, a hub for the new California Institute for Immunology and Immunotherapy at UCLA and the UCLA Center for Quantum Science and Engineering.
“For Los Angeles, [the development of the research park] will mean the rebirth of a once-bustling mall ... and will solidify our city's position as the epicenter for scientific achievements,” UCLA Chancellor Gene Block said at a press conference. “For California and the world, it will mean new advances that will greatly improve human health and better our global society.”
Google had leased the property through 2036 but never moved in. The company “helped enable and support UCLA’s acquisition,” a transaction made possible by “favorable real estate market conditions,” a news release says.
Hudson Pacific and Macerich owned One Westside and an adjacent movie theater, and the $700M price tag doesn't include prorations and closing costs, Hudson Pacific announced Wednesday.
The movie theater could be converted into lecture halls or other uses, UCLA said, adding that beyond research labs and offices, parts of the property could also be utilized as classrooms, lecture halls or event space.
The state's funding, $200M of which is already allocated, will go toward establishing and funding the new California Immunology and Immunotherapy Institute at UCLA.
“UCLA’s goal is to build the immunology equivalent of Silicon Valley in Los Angeles,” John Mazziotta, vice chancellor for health sciences and CEO of UCLA Health, said in a statement.
The UCLA Center for Quantum Science and Engineering will focus on research in quantum science and technology, which would include quantum computing, communication and sensing, with the aim of increasing information processing power, UCLA said.
“Challenging technology requires new, nontraditional approaches,” said Eric Hudson, a UCLA physics and astronomy professor who is spearheading the university’s quantum science efforts at the research center. “The hub will meet this challenge by creating an environment where UCLA researchers will work under the same roof with industry scientists from established industry leaders. Only by working together can we deliver the promise of quantum technology and position California companies at the forefront of this endeavor that's going to shape the next 100 years.”
Throughout last year, Securities and Exchange Commission filings by Google’s parent company, Alphabet, said it was focused on considering how it could reduce its expenses on real estate.
A Sept. 30 filing with the SEC said that Alphabet had spent $649M on exit charges related to real estate as well as “$207 million in accelerated rent and accelerated depreciation.”
A representative for Google declined to comment on whether or how much of those costs were incurred by Google exiting its 14-year lease at the property. But after an analysis of the company's greater LA footprint, Google determined that it could accommodate its employees in its existing space in Playa Vista and Venice and didn't need One Westside. The representative declined to specify when Google made the determination.
“Google has called the greater Los Angeles area home for over 20 years, and we saw an opportunity for the space to be better utilized in a way that benefits the broader community,” Google Vice President of Real Estate and Workplace Services Scott Foster said in a statement from UCLA.
“We’re delighted that UCLA will be further developing this state-of-the-art facility to help accelerate transformative research and innovation,” Foster added.
Hudson Pacific Properties and Macerich, which held 75% and 25% stakes, respectively, are able to wipe from their books a loan that was set to mature this year. The sale allowed the companies to repay the loan.
The loan’s Dec. 18 maturity date was originally slated for 2023, but HPP exercised its two options to extend, company filings show. The total amount owed on the loan was $324.6M as of Sept. 30. HPP's share, because of its 75% ownership stake, was $243.5M. The interest rate was just under 7%, HPP told Bisnow by email this week.
“The opportunistic sale of One Westside and Westside Two significantly bolsters our balance sheet and we now have no debt maturities until year-end 2025,” Hudson Pacific CEO and Chairman Victor Coleman said in a statement. “We transformed the former Westside Pavilion mall into a multi-award winning, modern and flexible campus environment that attracted not one, but two distinct large-scale, high-quality end-users, a testament to our ability to create value through development expertise, commitment to quality and strong relationships.”
The purchase of the mall is UCLA’s third in a little over a year. In June, UCLA bought The Trust Building in Downtown, and in September 2022, it bought the campus of a shuttered college in Palos Verdes. The purchases create more space to house students and hold classes.
