Pasadena, CA-based Alexandria Real Estate Equities Inc., an urban office REIT uniquely focused on collaborative life science and technology campuses in AAA innovation cluster locations, has acquired 219 East 42nd Street for $203 million on a fee simple basis, through a membership interest in the purchasing entity 219/235 East LLC.
As part of the transaction, 219/235 East LLC leased back 219 East 42nd Street on a triple net basis to Pfizer Inc., which announced earlier this year plans to relocate its global office headquarters to Manhattan’s Hudson Yards neighborhood in 2022.
Ideally located in the heart of Manhattan’s East Side Medical Corridor with critical adjacency to New York City’s renowned academic and medical institutions, the acquisition of this approximately 350,000 rentable square foot, 10-story office building represents significant and immediate net operating income growth with a strong yield from an investment-grade tenant.
Upon expiration of the lease, this highly sought-after asset will provide Alexandria with the opportunity to increase cash flows through conversion and redevelopment into office/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,” said Joel S. Marcus, executive chairman and founder of Alexandria Real Estate Equities, Inc. “In addition to developing New York City’s premier life science campus at the Alexandria Center for Life Science, we have brought together the city’s brightest minds from biopharma and academia to drive biomedical innovation; helped recruit top talent to the cluster to lead early-stage companies; bolstered scientific collaborations by providing companies with access to our world-class life science network; and been a leading provider of early-stage venture capital investment to New York City’s life science companies.”
According to a prepared statement, Alexandria was a critical first mover in the creation of the New York City life science cluster through the development of its world-class campus anchoring the city’s East Side Medical Corridor. Since its opening in 2010, the Alexandria Center for Life Science has fostered collaboration and innovation for a diverse range of high-quality entities from multinational pharmaceutical companies, such as Pfizer Inc., Eli Lilly and Company and Roche, to early- and growth-stage companies, including Intra-Cellular Therapies, Inc., Kallyope Inc. and MeiraGTx Holdings plc, as well as Lodo Therapeutics Corporation and Petra Pharma Corporation, which were both launched by Accelerator Life Science Partners, a leading life science investment and management firm co-founded by Alexandria.
“The success of the Alexandria Center and the multidisciplinary efforts of our team have been instrumental in the growth of New York City’s life science cluster,” said John H. Cunningham, executive vice president and New York City regional market director at Alexandria Real Estate Equities, Inc. “We have worked diligently to attract entities from all over the world to NYC and to provide these companies with affordable, high-quality laboratory and office space; valuable networking to leaders from across the life science community; and sophisticated amenities to support the translation of their scientific discoveries into treatments and cures for patients. Our proposed transformation of 219 East 42nd Street into a life science center signifies a groundbreaking extension of Alexandria’s unparalleled world-class franchise along Manhattan’s East Side Medical Corridor and an exciting expansion opportunity for our campus community.”
As of March 31, 2018, Alexandria’s New York City asset base comprised a 728,000 RSF, two-building office/laboratory campus with a future development opportunity for an additional 420,000 RSF tower on site. The campus is 100% leased to innovative life science entities, with 70% of the region’s annual rental revenue coming from investment-grade tenants.