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IPO Cash Is REIT’s Ticket to Acquiring Life Sciences Properties

It may be an understatement to say that September was a busy month for BioMed Realty Trust Inc., the San Diego-based investment firm that focuses on life sciences real estate.

The company, with headquarters in Rancho Bernardo, announced property acquisitions totaling more than $430 million in San Diego and South San Francisco. It then capped off the month by conducting an initial public offering of 15 million shares of common stock, grossing $262.5 million.

On Sept. 22, officials announced that the real estate investment trust had entered into a definitive agreement to acquire two adjacent life sciences campuses in the city of South San Francisco — Science Center at Oyster Point and Gateway Business Park — for a total of $298 million.

The campuses total nearly 500,000 square feet, with tenant rosters that include Elan Corp., Genentech Inc. and FedEx Corp.

BioMed has not returned recent calls seeking comment. But in a statement, Chairman and Chief Executive Officer Alan D. Gold deemed the Bay Area transactions as BioMed’s “most significant new investment” since its 2006 acquisition of the Center for Life Science in Boston. That deal involved an investment of more than $700 million by BioMed.

Once the deal closes, the San Francisco Bay Area will become BioMed’s second-largest market, after Cambridge/Boston, based on annualized rents, officials said.

Earlier in September, BioMed announced it was acquiring five San Diego properties, totaling 14 life sciences buildings, for approximately $132.9 million. Those include the building at 4570 Executive Drive in the University Towne Center submarket, purchased for $63.5 million, which is 100 percent leased to Bristol-Myers Squibb, Amylin Pharmaceuticals and UC San Diego.

“The investment market for these premier projects in the life sciences arena is very robust right now because the real estate investment trusts that own these types of properties are continually attempting to gain market share and increase their portfolio of quality tenants,” said David Odmark, a local broker with Cassidy Turley BRE Commercial. Odmark represented BioMed and the UTC property’s seller, LMC Executive Investment Co. LLC.

BioMed officials said the company would use net proceeds from the stock sale, which concluded Sept. 28, to fund a portion of the purchase price of the recently announced acquisitions. It will also repay a portion of its outstanding debt under an existing $720 million unsecured line of credit, and address other general corporate and working capital needs.

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More Stock Offerings By Local REITs: BioMed isn’t the only locally based real estate investment firm taking new dips into the stock market.

The most ambitious recent example is San Diego-based American Assets Trust Inc., which filed Sept. 13 to raise up to $500 million in an initial public offering.

The company said in a statement that it eventually plans to trade on the New York Stock Exchange under the symbol AAT. It has not disclosed the number of shares it would sell.

American Assets develops, manages and invests in retail, office and multifamily real estate. Its portfolio spans the nation. The company was founded in 1967 by Ernest Rady, who currently serves as its president and board chairman.

On Sept. 22, Escondido-based Realty Income, which is focused on retail and related commercial real estate holdings, announced the start of an underwritten public offering of 3.7 million shares of common stock.

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Apartment Sale Parade Continues: San Diego County is seeing a continuing wave of apartment building acquisitions and construction financing.

Among the latest examples, JH Real Estate Partners Inc. of Newport Beach is acquiring the 124-unit Central Park apartment complex in La Mesa for $14 million. A Sept. 20 statement from Manhattan Beach-based Venture West Funding Inc., the mortgage company that arranged financing for the purchase, said the project was built in 1989 and completely renovated to rental condos in 2006.

Also, Aliso Viejo-based Crown Acquisitions Inc. recently announced it purchased its fourth property in the San Diego market within the past year.


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