BioMed to Shell Out $298M for Two-Campus Life Science Portfolio in South San Francisco
- Sep 23, 2010
September 23, 2010
By Barbra Murray, Contributing Editor
BioMed Realty Trust Inc. has just made a $298 million move to enhance its presence in the San Francisco Bay Area’s coveted life science market. The REIT entered into a definitive agreement to purchase the Science Center at Oyster Point and the adjacent Gateway Business Park, which account for an aggregate 489,000 square feet of premier office and laboratory space–with room to grow.
Both assets are located in the South San Francisco submarket. Occupying a four-acre site off Gateway Boulevard at 180-200 Oyster Point Boulevard, the Science Center at Oyster Point is a newly developed research property consisting of two structures totaling 205,000 square feet of office and lab space. Elan Corporation plc occupies both three-story buildings in their entirety under triple net lease agreements scheduled to expire in 2024 and 2025.
Just a stone’s throw from the Science Center at Oyster Park is the Gateway Business Park at 700-1000 Gateway Boulevard. The research and development complex encompasses six buildings providing an aggregate 284,000 square feet of office and lab accommodations. Featuring a three-business tenant roster, Gateway Business Park is fully leased under agreements due to expire between 2012 and 2014, with Elan spilling over from across the street and taking 215,000 square feet. FedEx Corporation and Genentech Inc. also make their home in the park, occupying 50,000 square feet and 19,000 square feet, respectively. Additionally, the site presents an opportunity for expansion. If the transaction goes as planned, BioMed will assume a development agreement with the City of South San Francisco, thereby opening the gate to increasing the campus to approximately 1.2 million square feet through the addition of 946,000 square feet of new space.
While BioMed invests in state-of-the-art properties in all of the country’s leading life science hubs–Cambridge/Boston, San Diego, San Francisco Bay Area, Seattle, Maryland, Pennsylvania and New York/New Jersey–the REIT was able to move forward with a particular goal with the agreement to acquire the Science Center at Oyster Point and the Gateway Business Park. A company spokesperson said the move is a huge strategic step to establish a more significant footprint in South San Francisco — which is one of the largest life science markets in the country.
The company already has a 10-property portfolio in the San Francisco Bay Area market–including South San Francisco’s 152,000-square-foot 475 Eccles Avenue and the 238,000-square-foot 530-540 Forbes Boulevard. But once the Science Center at Oyster Point and Gateway Business Park transaction closes, the San Francisco Bay Area Market will have moved up to the number two spot on the list of the BioMed’s largest markets, right behind the Cambridge/Boston.
The $298 million price tag for the two life science campuses involves $290.3 million in cash and the assumption of an interest rate swap liability valued at approximately $7.7 million. Financing plans are already in place. On the day it announced the South San Francisco agreement, BioMed also announced a public offering of 15,000,000 shares of common stock. In an SEC document, the company noted that it foresees financing the South San Francisco deal–and the previously announced $132.9 million purchase of a 405,000-square-foot portfolio in San Diego–with cash on hand, borrowings under its unsecured credit facility and the anticipated $262.5 million in proceeds from the offering.