Alexandria Extends its Footprint in Palo Alto with Two Acquisitions Totaling $649MM in Stanford Research Park

Alexandria Stanford Research Park Hillview Avenue Invesco Morgan Stanley Tibco Software Electric Power Research Institute

By Vladimir Bosanac

Pasadena, Calif.-based Alexandria Real Estate Equities continues to make big moves with its portfolio across the greater Bay Area. On the heels of selling a 49-percent stake in Meta-occupied Menlo Gateway for $400 million, the life science and technology development and investment firm is spending $446 million, or $1,527 per square foot, to acquire 3301-3307 Hillview Avenue in Palo Alto’s Stanford Research Park. The deal is expected to close in the first quarter of 2022, according to a recent SEC filing by Alexandria. In addition, the company closed on two properties in October at 3420 and 3440 Hillview Avenue for a total of $203.8 million, or $1,100 per square foot.

Newmark’s Steve Golubchik, Jonathan Schaefler and Darren Hollak represented Alexandria in its acquisition of 3301-3307 Hillview Avenue. The brokerage firm declined to comment on the deal.

The latest investment extends the company’s ownership on Hillview Avenue – just a year ago, according to earlier reporting by The Registry, the company spent $40.5 million to buy 3450 and 3460 Hillview Ave. from Invesco. 

The seller of the 3301-3307 Hillview Avenue property was a fund associated with Morgan Stanley, which owned the buildings on Stanford University leased land since 2015. Morgan Stanley’s fund purchased the property at that time for $330 million, according to public documents. The property is a four-building asset, which is fully occupied by TIBCO Software.

The seller of the 3420 and 3440 Hillview Avenue buildings is the Electric Power Research Institute. These properties are 75 percent occupied, according to Alexandria’s SEC filings.

In recent months, Alexandria sold additional interests in two Mission Bay assets to New York City-based Nuveen. The San Francisco deals, which closed in October, saw Alexandria sell interest in both 409/499 Illinois Street and 1500 Owens for $274 million. In the spring of this year, Alexandria sold a 70 percent interest in 213 East Grand Ave. in South San Francisco for $301 million, or $1,429 per square foot.

In Seattle, another rapidly emerging life sciences market, Alexandria struck a deal with Clarion Partners to acquire 70 percent of a South Lake Union life sciences portfolio located along Eastlake Ave. E. and Blaine Street. Alexandria paid $315 million in the deal. The Registry also reported that the cap rate on the sale was in the low 4 percent range, and the capital source that Clarion used on this transaction was the Clarion Lion Properties Fund, which is Clarion’s flagship core open-ended commingled fund.

Overall, Alexandria is one of the largest developers of life sciences assets in the country. Currently, the firm has more than 7.7 million square feet of space under construction, and near-term projects are about 80 percent leased.

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