Alexandria Real Estate Equities Buys Torrey Ridge Science Center in San Diego for $182.5M
SAN DIEGO — An affiliate of Alexandria Real Estate Equities Inc. (NYSE: ARE), an urban office REIT based in Pasadena, Calif., has purchased Torrey Ridge Science Center in San Diego’s Torrey Pines submarket. Walton Street Capital and SteelWave sold the campus to Alexandria for $182.5 million.
Torrey Ridge Science Center is a Class A life science campus leased to companies such as Regulus Therapeutics, Pacira Pharmaceuticals, Nitto BioPharma, Interpreta and BP Technology Ventures. The three-building, 291,799-square-foot campus was 87 percent leased at the time of sale.
“This was a highly strategic acquisition for Alexandria in Torrey Pines, one of our core San Diego submarkets,” says Daniel Ryan, executive vice president and regional market director of San Diego for Alexandria Real Estate Equities.
Located at 10578, 10614 and 10628 Science Center Drive, Torrey Ridge Science Center was built in 2004 and since 2012 the sellers invested $55 million in base building and tenant improvements. The renovations included upgrading common areas, signage and landscaping, as well as creating a new dedicated central plant and adding chilled water systems for each building. The campus also features newly built tenant amenities including a fitness center, conference center and Wich Addiction café.
“The Torrey Ridge Science Center campus provides us with the opportunity to achieve significant cash flow growth as leases are renewed or rolled over, given that many of the in-place leases are below market,” says Ryan. “The campus also gives us the flexibility to convert traditional office space, which is approximately 22 percent of the project, to wet lab research space in order to respond to strong demand from leading biotech entities in San Diego.”
Louay Alsadek and Hunter Rowe of CBRE were the investment advisors, and Rich Danesi and Ryan Egli of CBRE were the market experts representing the sellers. Alexandria Real Estate Equities represented itself.
San Diego is home to one of the top three life science clusters in the United States, according to CBRE. The San Diego life science direct vacancy rate in the second quarter was 6 percent and in the Torrey Pines submarket the rate was 1.4 percent, according to CBRE.
Founded in 1994, Walton Street Capital is a private equity real estate manager that has invested and managed over $8 billion of commercial real estate on behalf of public and corporate pension plans, foreign institutions, insurance companies and banks, endowments and foundations, trusts and high-net-worth individuals.
SteelWave is a commercial, residential and mixed-use real estate management and operating firm. SteelWave and its predecessor company, Legacy Partners Commercial, have been active in commercial real estate for 44 years in five target markets: Northern California, Southern California, Denver, Seattle and Texas. SteelWave has acquired or developed over $9 billion of commercial assets in these target markets.
Alexandria Real Estate Equities has a total market capitalization of $12.4 billion and an asset base in North America of 24.4 million square feet as of June 30. The asset base in North America includes 18.8 million square feet of operating properties and development and redevelopment projects (under construction or pre-construction) and 5.6 million square feet of future ground-up development projects.
In San Diego, Alexandria has nearly 4 million square feet of office/laboratory space (including development and redevelopment projects currently under construction) in the Torrey Pines, University Town Center, Sorrento Valley and Sorrento Mesa submarkets.
Alexandria’s stock price closed on Wednesday, Oct. 12 at $103.25 per share, up from $92.25 per share this time last year.
— John Nelson