Posts

BioMed Realty Buys 1 Million-Square-Foot Flatiron Park Portfolio In Boulder

/in /by

After about six months on the market, a large portfolio within Boulder’s Flatiron Park business center has been purchased by BioMed Realty LLC.

The roughly 1,000,000-square-foot, 22-building campus was sold by Crescent Real Estate LLC and is home to a slew of technology companies. Apple Inc. is suspected to occupy as much as 240,000 square feet of space in the east Boulder park.

“This is an exciting transaction for Boulder and shows that Boulder’s getting a lot of national recognition,” Crescent senior vice president Ben Molk told BizWest.

The sale has yet to be recorded with Boulder County, so no price was immediately available. However, several commercial real estate brokers familiar with the offering told BizWest last year that Crescent was seeking at least $600 million.

Jones Lang LaSalle Inc. brokered the deal. Lionstone Investments LLC and Goldman Sachs Group Inc. also owned portions of the portfolio sold to BioMed. The sale was a joint venture between Crescent and those two groups. Crescent will remain involved in the portfolio as property manager and will likely dip another investment toe in the Boulder waters soon.

“We are absolutely buyers of real estate still, and we are big believers in Boulder,” Molk said. “We’re actively looking for a deal in the market.”

BioMed Realty is a Blackstone portfolio company that owns about 13.7 million square feet of commercial space throughout the country, according to a news release touting the Flatiron Park acquisition.

“With this significant investment in Boulder, we’re delighted to become a part of this innovation-based community,” Jon Bergschneider, president of West Coast markets at BioMed Realty, said in the release. “In addition to BioMed’s initial investment, BioMed anticipates investing an additional $200 million in redevelopment costs over time, which is expected to create nearly 400 new local construction jobs. Beyond being a preeminent regional tech and life sciences hub, Boulder is a thriving community that couples innovation with a profound respect for natural resources and sustainable practices. We look forward to joining and supporting the Boulder community by not only providing best-in-class workspaces for companies to continue their life-saving and inventive work, but also by creating strong, long-term relationships with local organizations working to maintain Boulder’s unique identity as a gem in the Rockies. About 15% of Flatiron Park is home to life sciences tenants and part of BioMed’s investment will be upgrading buildings to bring that percentage closer to 50%.”

Flatirons Park is San Diego-based BioMed’s only property in Colorado. The company’s portfolio is centered on six regions, including California’s Bay Area, Seattle and the New York metro area.

“What we focus on is innovation and technology clusters,” Bergschneider told BizWest. “Historically those have been in the East and West Coast markets. It’s been with great interest and enthusiasm that we’ve continued to watch the Boulder area grow.”

The Flatiron Park deal is likely not BioMed’s last in the Boulder Valley.

“We think of this as an opportunity to enter the market with size and scale and by no means is (the Flatirons Park acquisition) the end of our investment tolerance,” Bergschneider said.

As the local portfolio grows, BioMed, which also has a development arm, may consider adding administrative and support offices in Colorado.

“Boulder has always been a market to watch, driven by highly educated talent, robust capital flow, an existing base of life science and tech pioneers and great quality of life,” BioMed vice president of leasing Mike Ruhl said in a statement. “As demand for office and lab space in the region continues to grow, we believe BioMed’s integrated platform and expertise is uniquely suited to support companies as they continue to scale in this key market. We welcome the opportunity to contribute to a thriving community whose values directly align with our own.”

Apple, which has been cagey about the specifics of its Boulder presence, is suspected of taking over a large portion of formerly Crescent-owned real estate in Flatiron Park late last year. In its marketing materials, a major selling point for broker JLL was the presence of an “undisclosed tech tenant” with a signed 12.5-year lease — thought to be Apple — that raises the profile of the business campus.

Other high-profile Flatiron Park companies include KBI Biopharma Inc., Popsockets LLC and Sovrn Holdings Inc. In addition to its dozens of office tenants, Flatiron Park is also home to taprooms from Boulder’s own Upslope Brewing Co. and Broomfield-based 4 Noses, an Ozo Coffee Co. coffee shop, a deli and a gym, all of which are frequented by workers at the campus.

“BioMed’s portion of the park is 90% leased,” the company said.

If BioMed paid the rumored asking price of $600 million, that amounts to $600 per square foot, far in excess of what at least one similar portfolio sold for recently — although commercial real estate prices have been soaring.

The 485,000-square-foot Pearl East Business Park, for example, sold in July for $190 million, or $391 per square foot. That was $40 million more than the selling owners paid for the property just two years prior and 123% higher than the $85 million that longtime owner W.W. Reynolds Cos. sold the complex for in 2015.

Boston-based Tritower Financial Group LLC last June acquired the 60,030-square-foot former Trimble building at 2300 55th St. in Flatiron Park for $21 million, or $349.82 per square foot. But other recent deals involving global tech users have seen much higher sale prices per square foot.

Google last September paid $97.8 million — or $782.40 per square foot — for a 125,000-square-foot office building in The Réve development across from its main campus at Pearl and 30th streets. But that was for a brand-new building directly across the street from its main campus.

Atlanta-based Invesco Ltd. in January purchased the Pfizer campus in Boulder for $99 million, or $653.96 per square foot. Like Apple, Pfizer is a global enterprise with a longer-term lease on the facility. A 12.5-year lease — at a high rental rate with a stellar tenant such as Apple — means that a buyer likely could flip that part of the project, perhaps for as much as $1,000 per square foot, a commercial real estate broker who asked to remain unidentified told BizWest late last year. That would help justify the higher price for the rest of the portfolio, while Apple’s presence would help drive up rental rates in the rest of the park, the broker speculated.

“I really think this is going to be another milestone in our market, where it’s really going to dramatically raise the rents closer to California rents than Boulder rents,” the broker said.

A sale price in the magnitude of $600 million or more also could raise the value of other properties in Boulder, especially other buildings within Flatiron Park itself. The park includes about 2.3 million square feet overall, with numerous individual building owners alongside Crescent’s million-square-foot portfolio.

 

Source: Daily Camera

Three Health Care Investment Trends For 2022

/in , , /by

The healthcare sector was one of the beneficiaries of the pandemic, and the industry is rapidly growing.

As investors plan for 2022, Meridian CEO John Pollock is predicting three trends will drive activity healthcare real estate.

1. More Outpatient Facilities

The transition to outpatient facilities has been an ongoing trend over the last decade, and it accelerated during the pandemic.

“Services are migrating away from the acute care centers to more convenient outpatient centers” Pollock tells GlobeSt.com. “Ambulatory outpatient care facilities have been at the center of Meridian’s focus for years and we expect this trend to continue to accelerate and translate into more opportunities for investors, developers, and providers alike.”

2. Telehealth Gaining Momentum

Telehealth is the second major trend that Pollock sees gaining momentum this year.

“Everyone has read about the rapid adoption of telehealth during the pandemic. It certainly spiked in 2020, and while it has since leveled off, it is still an integral and effective means to deliver care,” Pollack says. “The physical manifestation of that trend is creating more flexible exam and telehealth rooms.”

The telehealth trend supports better patient care, especially as providers rush to build outpatient ambulatory facilities.

“We have seen an increasing need for outpatient ambulatory care centers either de novo or through renovations that require heavy lifting to meet the new care delivery models,” says Pollock. “A huge benefit of telehealth is providing greater access to care. During the pandemic, it provided a vital access point to care when physical appointments were not practical. Telehealth also allows patients in rural settings to have access to a specialist from the urban centers.”

3. A Focus On Behavioral Health

Finally, health care providers will increase focus on behavioral health.

“We are seeing numerous requirements,” says Pollock. “The stress, isolation and loss caused by the pandemic was the final straw and it is now widely known that behavioral health conditions impact one in four Americans.”

It isn’t only cultural changes that are driving activity in the behavioral space, but institutional investors are also backing these projects.

“Institutional investors have warmed up to having behavioral health tenants in their buildings and portfolios, and we have even seen cap rates move toward traditional medical office building valuations,” says Pollock. “It’s very exciting to be a part of creating more access to these much-needed services in our communities.”

 

Source: BenefitsPRO

The Pandemic Has Made Healthcare More Desirable

/in , /by

“The pandemic increased demand and made healthcare a more desirable asset class,” Rahul Chhajed, VP and senior director of healthcare at Matthews Real Estate Investment Services, tells GlobeSt.com about how the asset class fared during the pandemic.

For one, medical properties moved onto the list of darling asset classes, and it isn’t hard to understand why.

“It is no longer just a recession that investors are worried about. If there is another pandemic, healthcare services are something that people are always going to need. At the end of the day, everyone needs medical care,” says Chhajed.

With the exception of a temporary pause in the market at the beginning of the pandemic, when elective surgeries and other healthcare services were paused to allow healthcare providers to focus on COVID-19, healthcare properties outperformed other asset classes. Chhajed notes that many tenants didn’t need rent relief and continued to pay rent.

This year, investors have been trading out of more challenged asset classes, like retail and office, in favor of medial facilities.

“COVID really provided a proof of concept for the industry to show that this product type is here to stay. It is not only institutional, but it is an asset class that private capital should look at as well,” says Michael Moreno, VP and senior director of healthcare at Matthews Real Estate Investment Services.

Institutional capital has been the dominant player in the healthcare sector, and that is because it can be a more complicated asset class. Now, both institutional capital and private investors are competing for deals.

“More institutions have definitely entered the ring, but we are also seeing the private markets have started to buy these deals,” says Moreno.

And, there is a third player: owner-occupiers. Existing owners are looking at the demand—which has driven cap rates down significantly—and deciding to sell.

“The sale-leaseback market is really picking up, and a lot of that has to do with pricing,” says Moreno.

Over the last few years there has been significant cap rate compression, and owners would rather take the proceeds and put it back into the business and grow.

“Private buyers love those deals because they typically contain long-term leases and they are triple net,”  Moreno says.

On the lease side, retail owners are finding new users in healthcare. Many clinics and ambulatory centers are signing leases in retail facilities as part of the trend from in-patient care to out-patient care.

“Retail-centric healthcare is great for providers because the care is coming to the consumer,” says Chhajed. “A lot of these healthcare systems are looking for ways to provide ease of access, and retail centers meet those needs to make healthcare more accessible. The confluence of these trends is creating a heyday for medical assets after the pandemic. Now healthcare is looking stronger than ever.”

 

Source: GlobeSt.