Alexandria Closes $1.2B Life Science Recap

50 + 60 Binney St. Image courtesy of Newmark

Alexandria Real Estate Equities Inc. has recapitalized 50 and 60 Binney St., two life sciences buildings totaling approximately 530,000 square feet in Cambridge, Mass. The REIT relied on the assistance of Newmark to complete the $1.2 billion transaction with Norges Bank Investment Management and MetLife Investment Management.

Sited in a key transit-oriented location between two subway stations, 50 and 60 Binney are part of Alexandria’s Alexandria Center at Kendall Square, a 2.6 million-square-foot science and technology campus in the heart of Cambridge’s booming life sciences market.

The REIT developed both properties in 2017 after having signed build-to-suit agreements in 2015. Sanofi had signed on to occupy 50 Binney, which totals roughly 275,000 square feet, while Bluebeard Bio had entered into a lease agreement to occupy the approximately 250,000-square-foot tower at 60 Binney in its entirety.

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Designed by architecture firm SGA, both 50 and 60 Binney feature a hybrid of laboratory and office space on the upper levels and retail space at the street level. Each 10-story tower also offers six levels of below-grade parking space. Today, the LEED Gold-certified buildings remain 100 percent leased; although the tenancy has changed due to a sub-lease, and it will change again in the near future.

Bluebird had sublet space from Sanofi at 50 Binney in 2019 and on December 14, 2021, Bluebird entered into a sub-sublease agreement with Meta Platforms, under which Meta will lease the entire building at an annual cost of approximately $28 million.

Maintaining the spread

Robert Griffin, Edward Maher, Matthew Pullen and Samantha Hallowell of Newmark’s Capital Markets Group and William Sleeper, a financial analyst with the firm, represented Alexandria in the transaction with Norges Bank and MetLife. Alexandria’s 50 and 60 Binney Street deal comes on the heels of two recapitalizations the REIT completed in the third quarter of 2021.

“We are fortunate in that the demand for life science real estate investments continues to drive lower cap rates for stabilized buildings, allowing us to maintain our spread. And speaking of cap rate compression. During the quarter, we sold additional interest in our 409 and 499 Illinois and 1500 Owens assets [in San Francisco] while recapitalizing them with a new partner,” Peter Moglia, co-CEO of Alexandria Real Estate Equities Inc., said during the company’s third quarter 2021 earnings call on October 26, 2021. “In our original recapitalization done in December 2015, we achieved a total valuation of $1,021 per square foot and a blended cap rate of 4.6 percent. In this transaction, we achieved a blended cap rate of 4.2 percent and a price per square foot of approximately $1,362, representing 33 percent appreciation over the whole period.”