Breakthrough Properties Acquires Majority Interest in Callan Ridge, A Newly-Constructed, Fully-Leased Life Science Campus in Torrey Pines

Rhea-AI Summary

Breakthrough Properties (BMY) Acquires Majority Interest in Callan Ridge, a Class A Life Science Campus in San Diego Through a Joint Venture with Healthpeak Properties (PEAK)

Insights

Real Estate Investment Analyst

The strategic acquisition of a majority interest in Callan Ridge by Breakthrough Properties, in partnership with Healthpeak Properties, is a significant move within the life sciences real estate development sector. The transaction not only enhances Breakthrough's asset base within a prime biotech hub but also reinforces the value of Class A life science campuses, particularly in geographies like Torrey Pines where availability is scarce.

From an investment perspective, the long-term lease with Turning Point Therapeutics, a Bristol-Myers Squibb subsidiary, offers stable cash flows and reduces vacancy risk, which is a critical consideration for real estate investors. The emphasis on sustainable building features aligns with the increasing investor demand for ESG-compliant properties, potentially leading to higher asset valuation and attracting socially responsible investment.

The pursuit of LEED Gold certification could also indicate operational cost savings in the future, due to energy efficiency, which can contribute to an improved net operating income (NOI) for the property, a key metric for evaluating real estate investments. The strategic location adjacent to research institutes and the existing biotech ecosystem enhances the campus's appeal, potentially leading to capital appreciation over time.

Sustainability Consultant

The integration of sustainable building features in the Callan Ridge campus is a forward-looking approach that reflects the broader industry trend towards sustainability. The use of electrochromic windows, photovoltaic glass panels and recycled materials are not only environmentally responsible choices but also serve to reduce the long-term operating costs of the buildings. These features may also improve the working conditions for occupants, which is an increasingly important factor for companies looking to attract top talent in the competitive biotech sector.

Drought-tolerant landscaping and the implementation of the largest single-building green roof in San Diego demonstrate a commitment to local environmental challenges, enhancing the corporate image of Breakthrough Properties and potentially leading to stronger community relations. The LEED Gold certification aim is a testament to the quality and sustainability of the development, which could lead to various benefits including tax incentives, higher rental rates and increased demand from tenants prioritizing green spaces.

Biotech Market Analyst

The acquisition's impact on the biotech industry is multifaceted. Firstly, the presence of a leading biotech real estate developer like Breakthrough in a top-tier market such as Torrey Pines signals confidence in the continued growth of the biotech sector. This can have a cascading effect on the local market, potentially increasing property values and attracting further investment into the area.

Securing a fully leased campus to a subsidiary of Bristol-Myers Squibb until April 2035 provides a clear indication of the long-term stability and demand within the biotech real estate market. Furthermore, the proximity to research institutes and the ecosystem of innovation in Torrey Pines is likely to foster collaborations and accelerate the pace of scientific breakthroughs, contributing to the overall vibrancy and resilience of the biotech industry.

Breakthrough's expanding portfolio, which includes other projects like Torrey View and Torrey Plaza, positions the company as a key player in shaping the landscape of biotech real estate, potentially influencing future trends in lab design, tenant amenities and collaborative spaces within the industry.

The Acquisition, Via a Strategic Joint Venture with Healthpeak Properties, Further Accelerates Breakthrough's Growth in Premier Biotech Hubs

SAN DIEGO, Calif., Jan. 10, 2024 /PRNewswire/ -- Breakthrough Properties ("Breakthrough"), a leading global life sciences real estate developer, today announced it has acquired a majority interest in Callan Ridge, a two-building Class A life science campus nearing completion in San Diego's preeminent Torrey Pines cluster. The 185,000-square-foot campus is fully leased to Turning Point Therapeutics, Inc., a subsidiary of Bristol-Myers Squibb Company (NYSE: BMY), through April 2035.

Breakthrough, which is a joint venture of global developer Tishman Speyer and biotechnology investment firm Bellco Capital, will own a 65% interest in Callan Ridge, while the project's developer, Healthpeak Properties (NYSE: PEAK), a leading owner, operator, and developer of real estate for healthcare discovery and delivery, will retain a 35% interest.

The three-story campus, which commenced construction in 2021, incorporates a wide range of sustainable building features, including electrochromic windows, photovoltaic glass panels, recycled steel and concrete, drought-tolerant landscaping and the largest single-building green roof in San Diego. The joint venture will pursue LEED Gold certification upon full completion of the development.  Ideally situated adjacent to the Torrey Pines Science Park and in close proximity to San Diego's leading research institutes, Callan Ridge also features unobstructed panoramic views of the Torrey Pines State Natural Reserve.

"Callan Ridge presented us with a unique opportunity to acquire a newly-developed, trophy quality research campus in the heart of Torrey Pines – where Class A assets rarely become available – while also forming a new strategic partnership with the team at Healthpeak," said Breakthrough Properties Executive Vice President and Chief Investment Officer Daniel D'Orazi.  "Torrey Pines is one of the nation's leading biotech submarkets offering a dynamic ecosystem of research institutes, early-stage innovation and big pharma, proving throughout cycles to be one of the most sought-after clusters in the world."

Breakthrough is one of the most active players in global life science real estate, with a total portfolio and pipeline of more than five million square feet across seven leading biotech clusters in the U.S. and Europe. In San Diego, Breakthrough is also nearing completion on its 10-acre Torrey View by Breakthrough campus, which will be anchored by a diverse mix of biotech users including a new innovation center for Becton, Dickinson and Company.  Breakthrough also owns and operates Torrey Plaza in San Diego, a three-building life science campus within the Del Mar Heights submarket which is the inaugural home of Breakthrough's StudioLabs platform. 

About Breakthrough Properties (www.btprop.com)
Formed in 2019 as a joint venture between global real estate owner, developer, and investor Tishman Speyer and biotechnology investment firm Bellco Capital, Breakthrough Properties is a life science real estate development company that leverages cross-sector collaboration to deliver environments that foster innovation and scientific breakthroughs. Breakthrough Properties' mission is to acquire, develop and operate the best life science properties in leading urban technology centers around the world and support scientific innovation across biotechnology, agriculture, and nutrition. Breakthrough combines Tishman Speyer's decades of global real estate development experience with Bellco Capital's industry-making biotechnology entrepreneurship to reimagine environments where companies can create life-changing therapies for patients.

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SOURCE Breakthrough Properties

FAQ

What did Breakthrough Properties announce?

Breakthrough Properties announced the acquisition of a majority interest in Callan Ridge, a two-building Class A life science campus in San Diego, through a joint venture with Healthpeak Properties.

Who is the subsidiary of Bristol-Myers Squibb Company leasing the campus?

The campus is fully leased to Turning Point Therapeutics, Inc., a subsidiary of Bristol-Myers Squibb Company, through April 2035.

What is the ownership structure of Callan Ridge?

Breakthrough Properties will own a 65% interest in Callan Ridge, while Healthpeak Properties will retain a 35% interest.

What sustainable building features does the campus incorporate?

The campus incorporates electrochromic windows, photovoltaic glass panels, recycled steel and concrete, drought-tolerant landscaping, and the largest single-building green roof in San Diego.

What is the location of Callan Ridge?

Callan Ridge is ideally situated adjacent to the Torrey Pines Science Park and in close proximity to San Diego's leading research institutes, with unobstructed panoramic views of the Torrey Pines State Natural Reserve.

What is Breakthrough Properties' total portfolio and pipeline in global life science real estate?

Breakthrough has a total portfolio and pipeline of more than five million square feet across seven leading biotech clusters in the U.S. and Europe.

What other properties does Breakthrough Properties own in San Diego?

Breakthrough also owns and operates Torrey Plaza in San Diego, a three-building life science campus within the Del Mar Heights submarket, and is nearing completion on its 10-acre Torrey View by Breakthrough campus.

Who is the Executive Vice President and Chief Investment Officer of Breakthrough Properties?

Daniel D'Orazi is the Executive Vice President and Chief Investment Officer of Breakthrough Properties.