By Jon Peterson
Pasadena-based Alexandria Real Estate Equities has sold additional interests in two San Francisco Mission Bay assets to its New York City-based joint venture partner Nuveen for $274 million, according to the information stated in Alexandria’s third-quarter 2021 earnings report.
The properties involved in the transaction are 409/499 Illinois Street and 1500 Owens Street, which are both considered life science assets and are located in one of the strongest and most recognized biotech submarkets in the country. The cap rate on the transaction based on a cash deal was 4.2 percent, according to Alexandria.
The joint venture on 409/499 Illinois Street had called for Alexandria to be a 60 percent owner and Nuveen 40 percent. In 2016, Nuveen, then known as TIAA-CREF, had paid $189.6 million for its interest. With this transaction, Nuveen is now a 75 percent owner of the two buildings, and Alexandria owns the remaining 25 percent. The two buildings total 455,069 square feet and the properties were fully occupied when the deal was completed five years ago.
The venture on 1500 Owens had the ownership split of 50.1 percent to Alexandria and the other 49.1 percent to Nuveen. The fund manager had paid $73.3 million for its stake in 2016. After the recap, Nuveen holds a 75 percent interest in the property and Alexandria 25 percent. The property had no vacancies in 2016 and it totaled 158,267 square feet.
The sale of the additional interests in the assets by Alexandria comes in at $1,366 per square foot, according to the earnings report from the public REIT. Nuveen’s original investment in the two assets was acquired for the general account of TIAA-CREF.
Alexandria is a major owner of assets in both the Mission Bay sub-market and the San Francisco Bay Area in general. According to the third quarter 2020 earnings report, the public REIT holds a portfolio totaling 1.9 million square feet in Mission Bay with an operating occupancy in the portfolio of 99.8 percent. Its total assets in San Francisco total 8.9 million square feet with an operating occupancy of 94.5 percent.