BOSTON — Senior Housing Properties Trust (NYSE: SNH) has acquired the two-building headquarters of Vertex Pharmaceuticals in Boston for approximately $1.1 billion. The pair of 15-story towers includes biomedical research facilities, corporate office space, structured parking and street-level retail space for a total of 1.65 million square feet.
The property, leased to Vertex for the next 15 years, officially opened last month. Located in Boston’s Seaport District, the facilities will consolidate approximately 1,300 employees from 10 Vertex offices in Cambridge, Mass.
“The acquisition of this state-of-the-art property, which is ideally located in Boston’s fastest growing downtown submarket and one of the nation’s top investment markets, represents a unique opportunity to further diversify SNH’s portfolio and increase our exposure to the medical office building segment,” says David Hegarty, president and COO of Newton, Mass.-based SNH.
The trust predicts that the transaction will be immediately accretive to normalized funds from operations (FFO) per share by 6 to 8 cents per year. The deal is expected to close in the first half of this year.
“Post-closing, SNH will remain solidly positioned with a strong balance sheet and committed to its disciplined strategy of acquiring high-quality, premier properties that create significant value for SNH shareholders.”
Vertex, established in 1989, is the pharmaceuticals manufacturer behind groundbreaking medicines for the treatment of hepatitis C and cystic fibrosis. The company occupies 96 percent of the sold buildings, which are part of Fallon Co.’s larger Fan Pier mixed-use development.
Concurrent with SNH’s purchase agreement, the trust received a loan commitment of $800 million from Jefferies Finance LLC and Wells Fargo Bank. The five-year financing includes an interest rate of LIBOR plus 140 basis points and can be repaid in whole or part at any time without penalty.
In the long-term, SNH plans to finance the acquisition with a mix of debt and equity capital. The trust’s stock price per share closed at $21.99 on Monday, down from $24.40 per share one year ago.
Senior Housing Properties Trust is a healthcare REIT that owned nearly 400 properties in 40 states at the end of September 2013, according to the trust’s website. SNH was created by CommonWealth REIT (NYSE: CWH) in 1998 and spun out to CWH’s shareholders in 1999 as a separate publicly traded REIT.
— John McCurdy