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NEW YORK CITY—Alexandria Real Estate Equities has expanded its science cluster franchise, purchasing 219 E. 42nd St. from Pfizer for $203 million according to the REIT’s released statement. The pharmaceutical company had made plans to sell its properties at 219 E. 42nd and 235 E. 42nd streets in April, when it signed a lease to move its headquarters to the Spiral in Hudson Yards.
Through an entity 219/235 East LLC, in a joint venture Alexandria along with David Werner Real Estate and Deutsche Bank purchased the two buildings for a total of $360 million, subject to a partial sale leaseback to Pfizer for at least five years, according to Real Capital Analytics. This gives Pfizer time to remain in its location, until the Spiral’s construction is completed, which is scheduled for 2022.
The E. 42nd Street property well suits Alexandria’s bio and technology focus as it is in the heart of Manhattan’s East Side medical corridor, close to academic and medical institutions.
Constructed in 1905, the 10-story building offers 350,000 rentable square feet. It will provide significant and immediate net operating income growth with a strong yield from an investment grade tenant, according to Alexandria. The company further states that upon the expiration of Pfizer’s lease, the asset will provide additional opportunities to increase cash flows by converting and redeveloping the property into office and laboratory space.
“Alexandria has been at the vanguard of catalyzing the evolution and growth of the New York City life science cluster for more than a decade,” says Joel S. Marcus, Alexandria’s executive chairman and founder. He points out that in addition to developing the life sciences campus, the REIT brought together biopharma and academic expertise to drive biomedical innovation; supported leading early-stage companies; bolstered scientific collaborations; and provided early stage venture capital investment for life sciences companies.
Opening in 2010, the Alexandria Center for Life Science has collaborated with multinational companies, such as Pfizer Inc., Eli Lilly and Company and Roche. They also worked with earlier stage companies, including Intra-Cellular Therapies, Kallyope, MeiraGTx Holdings, Lodo Therapeutics Corporation and Petra Pharma Corporation. The latter two were launched by Accelerator Life Science Partners, a life science investment and management firm co-founded by Alexandria.
As of March 31, 2018, Alexandria’s New York City asset base comprises 728,000 rentable square feet across a two-building office and laboratory campus. The property has future development potential for an additional 420,000 rentable square-foot tower. The campus is 100% leased to innovative life science organizations.
A national company, headquartered in Pasadena, CA, the REIT also has offices elsewhere in the states of CA, MA, MD, NC, NY and WA.
Betsy Kim is the bureau chief, East Coast, and New York City reporter for Real Estate Forum and GlobeSt.com. As a lawyer and journalist, Betsy has worked as the director of editorial and content for LexisNexis Lawyers.com, a TV/multi-media journalist for NBC and CBS affiliated TV stations in the Midwest, and an associate producer at Court TV.
At present, the moratorium does not affect New York City, which is served by Con Edison. However, on its website, Con Edison stated, “We continue to accept new gas customer applications in New York City. We will continue to monitor increases in customer demand and our ability to meet that demand with traditional supplies or clean alternatives in our New York City gas service area.”
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