$203M Refi Deal Speaks to Strength of Life Sciences Sector
- Feb 13, 2009
Economic turmoil has touched every segment of real estate, but there are signs that some sectors, like life sciences, are faring better than others. According to civil engineering firm Giffels-Webster Engineers’ list of top five real estate and development trends, life sciences is the fourth hottest growth market. And BioMed Realty Trust’s closing of a $203 million refinancing of a loan for a 600,000-square-foot portfolio indicates that lenders still have faith in the market. With KeyBank National Association acting as the administrative agent of a syndicate of lenders, BioMed refinanced what was originally a $550 million secured acquisition and interim loan facility obtained from KeyBank National Association nearly two years ago as part of BioMed’s joint venture with a Prudential Real Estate Investors-managed fund. BioMed, which holds a 20 percent stake in the joint venture, used the proceeds from the refinancing deal–which carries an amended term of two years with the possibility of an additional one-year extension–to pay down outstanding debt under the original loan. BioMed and PREI had secured the funds in 2007 to purchase a $507 million portfolio of properties that included the 185,000-square-foot 320 Bent St. office and laboratory building and the 420,000-square-foot 301 Binney St. life science property (pictured) at the Rogers Street project in Cambridge, Mass. The group of assets also included the Kendall Square project, which encompasses a 1,400-space underground parking facility and a number of parcels, one of which will give rise to 650 E. Kendall St., a 266,000-square-foot lab and office structure that is currently under construction. Also included in the joint venture’s portfolio acquisition was a development parcel across from the University of Texas M.D. Anderson Cancer Center in Houston, and properties in the Science Park at Yale in New Haven, Conn. So why would the lending community be interested in providing refinancing for life sciences? “Our view is that life science real estate is holding up well, generally, as these facilities are mission critical to the tenants they serve,” a BioMed spokesperson told CPN. “Compared to office space, where changing locations is almost a non-event beyond the disruptions from moving, life science properties provide all of the essential infrastructure elements that help their tenants advance their research, which is fundamental to their business and business model.” Life sciences real estate news has been somewhat of a mixed bag over the last few months. As per the New York Post, in November, Alexandria Real Estate Equities Inc. decided to postpone construction of the 442,000-square-foot second phase of the 1.1 million-square-foot, $700 million East River Science Park in New York City as a direct result of the presently unfriendly lending market. On the flip side, news recently emerged that the San Jose BioCenter, a public-private incubator, will kick off a $5 million expansion project this spring. Headquartered in San Diego, BioMed is a public REIT that provides real estate predominantly to the life sciences industry. The company owns or has interests in 69 properties accounting for an aggregate 10.4 million square feet in markets from San Diego to Boston. BioMed’s joint venture partner, Parsippany, N.J.-based PREI, is the real estate investment management arm of Prudential Financial Inc. and, as of the close of the third quarter of 2008, manages over $46.7 billion in gross real estates assets on behalf of more than 460 clients around the world.