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Boston Properties CEO: Alexandria Real Estate JV is '1 + 1 = 3' scenariofrom SNL Real Estate Daily Boston Properties CEO: Alexandria Real Estate JV is '1 + 1 = 3' scenarioSection: Extra Byline: Tom Yeatts Boston Properties Inc. CEO Owen Thomas described the company's life science joint venture in South San Francisco with Alexandria Real Estate Equities Inc. as a win-win for both companies and, by virtue of the geographic circumstances, a practical move. The three office properties that Boston Properties contributed to the venture 601, 611 and 651 Gateway Blvd. are adjacent to Alexandria assets, separated by a strip of land that Boston Properties owns but that is encumbered by a surface parking easement for an Alexandria property. The merging of the rights will allow the companies finally to develop the land, Thomas said on the company's 2019 year-end earnings call Jan. 29. "This is one plus one equals three," Thomas said. "We're creating value just by putting the two sides together." Thomas on the call described the South San Francisco market as a stronger lab-space market than an office market. The deal effectively opens up three new development opportunities for Boston Properties there, and the company will suffer no loss of income, he said. The venture marks Boston Properties' expansion into laboratory space in South San Francisco; the company's assets had been 100% traditional office. "Assuming we build all the lab buildings, and we do some conversion of some of the existing assets, we're probably going to be somewhere closer to 50% or 60% lab in this marketplace at the end of the day," Boston Properties President Douglas Linde said on the call. Boston Properties is aiming for a 7% return on cost with the development, which it expects to begin in the latter part of 2020, Linde said. The three buildings Boston Properties contributed comprise about 768,000 square feet. Alexandria contributed approximately 313,000 square feet of existing properties including a lab building, an office property and an amenity building, as well as developable land. |
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