Healthpeak Properties Enters into a New $236 Million Joint Venture with Breakthrough Properties on the Callan Ridge Lab Campus in Torrey Pines
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Insights
The strategic joint venture between Healthpeak Properties and Breakthrough Properties marks a significant transaction in the real estate market, specifically within the life sciences sector. The valuation of the Callan Ridge lab campus at $236 million, or $1,275 per square foot, is a noteworthy data point that suggests a robust demand for specialized lab spaces, a segment that has seen considerable growth due to the ongoing expansion of the biotech and pharmaceutical industries. The established cash capitalization rate of 5.3% is indicative of the property's income-generating potential and is a critical metric for investors assessing the stability and expected yield of real estate investments.
Retaining a 35% interest allows Healthpeak to continue benefiting from the property's financial performance while also liquidating a portion of their asset to inject capital back into other areas of their portfolio. This move could signal a strategic shift or diversification effort within Healthpeak's asset management strategy, which could have implications for the company's future revenue streams and investment profile.
The transaction between Healthpeak and Breakthrough Properties underscores the increasing value of real estate within the biotechnology sector. As companies in biotech continue to grow, the demand for high-quality lab space in key innovation hubs like the Torrey Pines submarket of San Diego is likely to remain strong. This trend is not only a reflection of the current market conditions but also of the long-term trajectory of the biotech industry, where proximity to talent and cutting-edge research facilities is critical.
The pricing of the Callan Ridge lab campus is a testament to the premium that tenants are willing to pay for such specialized spaces. For stakeholders in the biotech real estate market, this deal may serve as a benchmark for future transactions, potentially influencing lease rates and investment strategies in similar markets. The strategic recapitalization also highlights the attractiveness of life sciences assets as investment vehicles, offering potentially lucrative opportunities for both real estate and biotech investors.
The formation of the joint venture is a strategic financial move for Healthpeak, allowing the company to realize and crystallize the development value created in the Callan Ridge lab campus. By selling a 65% interest and maintaining a 35% stake, Healthpeak effectively balances risk and reward, maintaining exposure to a high-value asset while unlocking capital. This capital can be redeployed to fund other development projects or reduce leverage, thereby potentially improving the company's financial ratios and creditworthiness.
For investors, the transaction provides insight into Healthpeak's capital allocation strategy and its focus on creating shareholder value through asset management and development. The ability to recapture initial invested capital while still maintaining a stake in a high-demand asset class is a strategic maneuver that could strengthen Healthpeak's balance sheet and support its growth trajectory. The deal also serves as a barometer for the health of the commercial real estate market, particularly in the life sciences niche, which could influence investor sentiment and stock performance.
Callan Ridge Campus -
The formation of the
“This strategic recapitalization was a unique opportunity to partner with Breakthrough, crystallize significant development value creation, and accretively recycle capital back into our business,” said Scott Brinker, President and Chief Executive Officer of Healthpeak. “The strong pricing highlights the underlying demand for our lab assets and allows us to recapture our initial invested capital, while still retaining a
Estimated net proceeds to Healthpeak are approximately
Healthpeak began construction on the 185,000 square foot Callan Ridge campus in 2021. The two-building campus is fully leased to Turning Point Therapeutics, Inc., a subsidiary of Bristol-Myers Squibb Company (NYSE: BMY), through April 2035. The lease on 105,000 square feet commenced in July 2023 and the lease on the remaining 80,000 square feet will commence in July 2024. Callan Ridge has numerous sustainable building features, including a photovoltaic canopy, electrochromic windows, recycled steel and concrete, and drought-tolerant landscaping. The joint venture will pursue LEED Gold certification upon completion of development.
ABOUT HEALTHPEAK PROPERTIES
Healthpeak Properties, Inc. is a fully integrated real estate investment trust (REIT) and S&P 500 company. Healthpeak owns, operates, and develops high-quality real estate for healthcare discovery and delivery. For more information regarding Healthpeak, visit www.healthpeak.com.
FORWARD-LOOKING STATEMENTS
Statements in this release that are not historical factual statements are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include those regarding the development of Callan Ridge and the related joint venture. All forward-looking statements are made as of the date hereof, are not guarantees of future performance and are subject to known and unknown risks, uncertainties, assumptions and other factors — many of which are out of Healthpeak's and its management's control and difficult to forecast — that could cause actual results to differ materially from those set forth in or implied by such forward-looking statements. These risks and uncertainties include but are not limited to: Healthpeak's ability to complete the development within expected cost projections; the risk that Healthpeak may not be able to achieve the benefits of the development or the joint venture within expected timeframes or at all; and other risks and uncertainties described from time to time in Healthpeak's Securities and Exchange Commission filings. You should not place undue reliance on any forward-looking statements. Healthpeak assumes no, and hereby disclaims any, obligation to update any forward-looking statements as a result of new information or new or future developments, except as otherwise required by law.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240111758459/en/
Andrew Johns, CFA
Senior Vice President – Investor Relations
720-428-5400
Source: Healthpeak Properties, Inc.
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