Chicago REIT To Pay $1B For Bay Area Life Sciences Buildings: REPORT
Investor demand for Bay Area life sciences properties might be as high as ever.
Chicago-based real estate investment trust Ventas has acquired South San Francisco's 721K SF Genesis project and another property in the city for about $1B, according to Commercial Mortgage Alert.
San Diego-based life sciences developer Phase 3 Real Estate Partners purchased the then-single-tower site, located at 1 and 2 Tower Place, for $220M in 2015 and opened the 21-story second tower last year. While the 12-story building is fully occupied, the newer tower entered the pandemic with about 8% vacancy, the San Francisco Business Times reported in March.
Phase 3 is joined by Bain Capital in a joint venture selling the properties, which include a four-story, 72K SF building at 4000 Shoreline Court, Commercial Mortgage Alert reports. Citigroup and J.P. Morgan are supplying a $415M 10-year, fixed-rate mortgage, the outlet said.
The transaction had yet to be reflected in county property records at the time of this report.
The deal is one of the clearest signs of a hot life sciences sector in several markets across the country, including the Bay Area. Nationally, Blackstone, one of the world's largest owners of real estate, said its already-strong interest in life sciences real estate has only grown.
Meanwhile, South San Francisco and neighboring cities continue to receive a host of activity despite the economic slowdown. Bay Area life sciences space saw over 540K SF of gross absorption and 106K SF of positive net absorption in Q2, according to Kidder Mathews.
Genesis' recently completed north tower was the tallest life sciences lab building on the West Coast upon its opening last year, according to Phase 3 and architecture firm Skidmore, Owings & Merrill. The project includes a fitness center, a conference center and a seven-story parking structure.
Ventas' purchase price for the three buildings combined comes out to about $1,261 per SF. It did not respond to a request for comment, and Bain Capital and Phase 3 Real Estate Partners declined to comment.
A healthcare REIT that owns and operates senior housing, R&D real estate and healthcare properties throughout the U.S., Ventas has faced challenges from the senior housing sector's struggles during the coronavirus pandemic. It reported a second-quarter loss of $159.2M, and its stock is down about 23% year-to-date.
