NEWARK, CA-Sun Microsystems has a taker for its largest campus, a 10-building 1.4-million-sf campus here that comes with excess land for another 400,000 sf of built space. The buyer, at $215 million plus closing costs, is BioMed Realty Trust Inc., a San Diego-based REIT that intends to recast the campus as a home for life science tenants. The sale is expected to close in the third quarter. reported in early May that the property was coming to market. On June 1, Sun Micro revealed that the sale was part of a larger plan that would include 5,000 layoffs by the end of the year and additional real estate dispositions. The Santa Clara-based company is trying to curtail four years of declining revenue.

BioMed CEO Alan Gold said in a Thursday morning conference call that a limited availability of large contiguous spaces for lease to life science tenants in the San Francisco Bay area and shadow tenant demand in excess of one million sf positions the Sun campus to generate attractive returns. Moreover, Gold said the campus is particularly suited for a conversion to life science space because it consists of two-story R&D and lab facilities with the necessary floor-to-ceiling clearance and floor load bearing capacity that life science tenants require.

The sale price equates to $143 per sf when the land value ($16 million) is excluded from the calculation. Given an all-in investment of $300 per sf, Gold said current market rents imply a cash yield of approximately 10% assuming stabilization by the end of 2010.

The sale agreement for the Newark campus includes an up to 18-month leaseback by Sun that is cancelable in whole or in part at the Sun’s option with 90 days’ notice. The lease rate for the leaseback is $13 per sf per year, triple net, said Gold during the conference call.

Sun’s employees and operations on the Newark campus will relocate to other Bay Area locations over the next six to 18 months. Sun’s other Bay Area locations include its 816,000-sf headquarters campus in Santa Clara and a one-million-sf campus in Menlo Park.

The acquisition will instantly expand BioMed’s portfolio by nearly 25%. BioMed’s real estate portfolio currently consists of 5.8 million sf in 70 buildings in 46 properties. The properties are located in Boston, San Diego, San Francisco, Seattle, Maryland, Pennsylvania and the New York-New Jersey area.

Sun’s 17-million-sf portfolio includes about 9.3 million sf of leased and 7.7 million sf of owned space, a source with Sun tells The leased space includes 3.3 million sf in the Americas (including two million sf in the Bay Area; 2.6 million in Europe, the Middle East and Africa; and 1.2 million sf in Asia. Much of the owned portfolio is located in the Silicon Valley, Denver and Boston areas).

The property was marketed by Michel Seifer, a locally based managing director with Chicago-based Jones Lang LaSalle, and Michael Leggett of locally based Cornish & Carey. Gold said BioMed began pursuing Sun’s Newark campus after one of its tenants expressed interest in a campus environment with between 400,000 sf and 800,000 sf of contiguous space.

“That tenant, because we couldn’t provide the space in a time frame they needed, has potentially moved on, and we also missed out on two other 200,000-sf-plus tenants in that submarket [for similar reasons],” said Gold. “There remains shadow tenant demand of well over one million sf beyond those just described.”

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