Sale-Leaseback Deal With Ionis Pharmaceuticals Tops $258 Million
By Lou Hirsh CoStar News October 24, 2022 | 5:16 P.M.
Oxford Properties acquired a Carlsbad, California, biotech campus in a $258.4 million sale-leaseback deal with Ionis Pharmaceuticals, among the San Diego region’s biggest life science deals of the past year and Oxford’s second large local purchase of 2022 amid rising demand for life science real estate.
A Monday Securities and Exchange Commission filing by Ionis said the biotech firm agreed to sell its three-building headquarters campus at 2850, 2855 and 2859 Gazelle Court to Toronto-based Oxford. The campus spans approximately 250,000 square feet on 18 acres, with the buildings constructed between 2011 and 2021, according to a statement from the buyer.
The Ionis filing said the company plans to lease the buildings for a minimum of 15 years and that it also agreed to sell two nearby vacant lots to Oxford for $33 million. Ionis plans to lease new structures to be built by Oxford on those lots and has a right of first offer to purchase those properties if Oxford decides to sell.
This is Oxford Properties’ second major acquisition in the San Diego region this year, after its $464.3 million purchase in February involving 13 life science and technology buildings from BioMed Realty in the city’s Sorrento Mesa and Mira Mesa neighborhoods.
Chad Remis, executive vice president of Oxford Properties, said in a Monday statement that the latest purchase “adds another leading life sciences company to our business” as Oxford builds up its life science holdings in San Diego, the nation’s third-largest hub for biotech real estate after Boston and San Francisco. The deal brings Oxford's San Diego biotech footprint to approximately 900,000 square feet.
“While we have a healthy cash balance, we also have near-term capital needs to scale our organization to deliver on our growth initiatives,” Ionis Chief Financial Officer Elizabeth Hougen said in the Oxford statement.
Ionis Pharmaceuticals develops cardiovascular and neurological therapies derived from ribonucleic acid, or RNA-based technologies. The company earlier this month announced plans to lease space in a new manufacturing facility to be developed by Sudberry Properties in nearby Oceanside, California.
The Oxford-Ionis sale-leaseback is among the latest indicators of still high biotech space demand in a challenging economy for most types of real estate. A third-quarter report from brokerage Cushman & Wakefield said San Diego had a 5.3% vacancy rate for biotech-related real estate, among the tightest in the nation, down 50 basis points from the prior quarter and 130 basis points from a year earlier.
San Diego biotech asking rents at the mid-point of 2022 were up more than 31% from a year earlier, the brokerage reported. Current biotech projects under construction nationwide are expected to add 26.6 million square feet of lab space to existing inventory.
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