Gilead Closes $137M Buy for Campus Expansion

FOSTER CITY, CA-Gilead Sciences Inc. said Thursday it has acquired 35-acres bordering its 17-building headquarters campus here for $137.5 million. The purchase, from Electronics for Imaging Inc., nets the public biopharmaceutical company one additional office building totaling 163,000 square feet; 30 acres of excess developable land entitled for an additional 542,000 square feet of development; and the right of first refusal to acquire the rest of EFI’s adjacent real estate assets, including a 10-story, 300,000-square-foot office building.

EFI’s headquarters campus is located along East Third Avenue between lakeside and Marsh Drives, across from the Links at Mariners’ Point. EFI received approvals from the Foster City Council several years ago for one million square feet of offices, R&D and light warehousing (pictured). The company has completed just the two buildings already mentioned.

The smaller building, which Gilead has acquired, is a low-rise structure located at 301 Velocity Way. EFI is leasing back a portion of the building through mid-April. The EFI office building that Gilead has the right of first refusal to acquire is 303 Velocity Way.

As of May, both buildings were subject to synthetic lease agreements that ran into 2014. According to SEC filings, EFI was allowed, at its option, to purchase the facilities back during the term of the leases for the amount expended by the lessor to purchase the facilities–$56.9 million for the 303 Velocity Way Lease and $31.7 million for the 301 Velocity Way Lease.

Gilead tied up the property in October and made a $5-million refundable deposit to the seller, Electronics for Imaging Inc, a locally based publicly-held maker of printers, print servers, inks and related software that began marketing its 35-acre property in May as part of a downsizing effort. Per the option agreement, Gilead had until Dec. 12 to terminate the deal without losing its deposit or commit to the deal by putting up an additional $5 million that, along with the initial $5 million, presumably would have become non-refundable. Neither Gilead nor EFI have filed the actual agreement with the SEC.

Instead, on deadline day, the Gilead and EFI agreed to extend Gilead’s termination right to Jan. 13, 2009, according to a Dec. 18 filing with the SEC by EFI. The January deadline came and went without an announcement or SEC filing from either party, which did not respond to requests for comment until today when they revealed that property had changed hands.

Jones Lang LaSalle had the disposition assignment. JLL Capital Markets managing directors Michel Seifer and Robert Dmytryk led the listing team.