Alexandria Real Estate Spends $105.25 on JC Penney Property in San Bruno

South San Francisco, Peninsula, Breed's Hill Capital, Apexlogistics 573 Forbes Blvd

By Vladimir Bosanac

Pasadena-based Alexandria Real Estate Equities, which just released its third quarter of 2021 results, has had a very busy quarter, and for that matter a very busy year, as well. In addition to the previously reported equity sale of its two Mission Bay properties to partner Nuveen, the life science and technology developer is also looking toward the future. And in that future, the company plans to develop 700,000 square feet of space at 1122 El Camino Real in San Bruno, at a former JC Penney location. Alexandria just purchased this location in September for $105,250,000, according to the company’s third-quarter 10-Q filing.

The purchase was part of a larger acquisition initiative within the company, which saw $3.9 billion in purchases across 76 properties that Alexandria acquired during the nine months ending September 30, 2021. The company has reasons to be optimistic. The third quarter saw a slightly higher total revenue number than that of a year ago; however when comparing the nine months in 2021 to those in 2020, the company’s revenues grew over 8 percent. On a net income basis, those numbers are even better—over 30 percent increase in the third-quarter of 2021 over the same quarter a year ago, and over 49 percent increase in net income when comparing the first nine months of this year to last year.

While the company experienced significant positive outcomes over the last year, it sees a number of external risks affecting its business in the future. According to the report, Alexandria believes it is exposed to interest rate risk, which may result from a number of factors. These could include government monetary and tax policies, including domestic and international economic and political outcomes. However, perhaps the biggest immediate risk the company cites is associated with the volatility in commodity and labor prices or results associated with supply chain or procurement disruptions. 

Plans for its recent acquisition in San Bruno are uncertain at this time, but its proximity to the life science mega cluster located in South San Francisco is undeniable. Alternative uses for outdated assets, such as this retail one, and conversations into life science properties is something many in the industry are considering. Yet, there are few who know the life science industry as well as Alexandria, which portends an interesting evolution and future of the Tanforan neighborhood.

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