SANTA MONICA, CALIF. — A joint venture between Boston Properties Inc. (NYSE: BXP) and Canada Pension Plan Investment Board (CPPIB) has acquired the 47-acre Santa Monica Business Park for approximately $627.5 million. The seller was not disclosed.
Santa Monica Business Park consists of 21 buildings totaling roughly 1.2 million square feet of office and retail space in Santa Monica, a coastal city just west of downtown Los Angeles.
The property is located near Interstates 10 and 405 and features a variety of on-site services, including a health club, restaurants, banks, a car wash and a dog park. The property lies within the Ocean Park neighborhood and was 94 percent leased at the time of sale.
Boston Properties will invest $147.4 million in the acquisition, yielding a 45 percent ownership stake, while CPPIB will invest $180.1 million. An undisclosed lender provided a $300 million acquisition loan to fund the remainder of the acquisition. The loan features a 4.06 percent interest rate and matures in July 2025.
Approximately 70 percent of the rentable square footage is subject to a ground lease with 80 years remaining, including renewal periods. The ground lease provides the joint venture with the right to purchase the land underlying the properties in 2028 with subsequent purchase rights every 15 years.
“The Santa Monica market has demonstrated strong growth in demand and rental rates from a variety of world-class tenants and industries,” says Owen Thomas, CEO of Boston Properties. “Boston Properties and its joint venture partners now own 2.3 million square feet and control 24 percent of the Santa Monica Class A office market, creating a strong platform for us to continue to grow in the West LA markets.”
The stock price of Boston Properties closed at $125.19 per share on Friday, July 20, up from $119.27 per share a year ago.
— Taylor Williams