Healthpeak Sells Majority Stake in Biotech Property in High-Demand San Diego Enclave
Deal With Breakthrough Properties Values Campus at $236 Million
The Callan Ridge life science campus in San Diego is fully leased to Turning Point Therapeutics, a subsidiary of Bristol Myers Squibb. (CoStar)
By Lou Hirsh
CoStar News
January 11, 2024 | 1:28 P.M.
Real estate investment trust Healthpeak Properties sold a 65% stake in a newly built San Diego life science campus in a deal that values the entire campus at $236 million, making it among the region’s largest office deals of the past year.
Denver-based Healthpeak, among the nation’s largest holders of biotech and medical offices, said it sold the majority stake in its Callan Ridge office and lab campus to Los Angeles-based investment firm Breakthrough Properties as part of a new joint-venture arrangement.
The two-building, three-story Callan Ridge campus spans about 185,000 square feet and was developed by Healthpeak in the Torrey Pines neighborhood of coastal La Jolla, the San Diego region’s largest biotech hub and among the nation's biggest. The property’s construction began in 2021 and it is nearing completion at 3020-3030 Callan Road.
The campus is fully leased to Turning Point Therapeutics, a subsidiary of Bristol Myers Squibb, thought April 2035. Healthpeak officials said Turning Point began leasing 105,000 square feet at the Callan Ridge campus in July 2023, and it has a lease in place to occupy the remaining 80,000 square feet starting in July 2024.
A Healthpeak statement said the REIT will receive net proceeds of approximately $130 million after factoring in the company’s remaining share of tenant improvement costs. The deal values the property at about $1,275 per square foot, making it among the San Diego region’s largest office transactions of the past year by total and per-square-foot price, based on CoStar and public data.
“The strong pricing highlights the underlying demand for our lab assets and allows us to recapture our initial invested capital, while still retaining a 35% interest in the trophy campus,” Healthpeak CEO Scott Brinker said in a statement.
High-End Property Demand
Breakthrough Properties Chief Investment Officer Daniel D’Orazi said in a statement that the deal for Callan Ridge provided the company “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.”
U.S. biotech real estate deals leveled off during the past year as many small- and medium-sized companies pulled back on space with demand waning for coronavirus-related vaccines and treatments. But industry analysts and developers have said demand generally remains strong, especially among larger global pharmaceutical firms, which continue to add space in major life science hubs including Boston, San Francisco and San Diego.
Nationwide demand is expected to remain steady in the long term as companies increase space requirements in growing research areas such as cancer, dementia, diabetes and obesity, according to brokers and industry analysts.
Breakthrough Properties is a joint venture of global office developer Tishman Speyer of New York and biotech investment firm Bellco Capital of Los Angeles. The venture was formed in 2019 and now oversees a nationwide biotech property portfolio spanning more than 5 million square feet.
Breakthrough owns two other biotech properties in the Torrey Pines area including the 10-acre Torrey View campus, which is under construction and slated to be occupied by tenants including medical device maker Becton, Dickinson and Co.
Healthpeak Properties oversees a nationwide portfolio of biotech and medical office properties spanning more than 50 million square feet and valued at more than $20 billion, according to company statements.