A joint venture between Ventas and GIC is close to finalizing a $475M loan backed by a pair of Pennsylvania life sciences research facilities. Both are leased to major universities.
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Wells Fargo and JPMorgan Chase are issuing the fixed-rate loan, which is expected to close Oct. 2 and then be sold as a CMBS loan, according to a presale report released Wednesday by KBRA.
The loan with a 5.75% interest rate will be interest-only, according to the report, meaning Ventas and GIC won’t have to pay off the principal until it matures in 2029.
The buildings securing the loan are both fully occupied with long-term leases: the 455K SF Drexel University Health Science Building in West Philadelphia and the 356K SF Assembly building by the University of Pittsburgh. They account for 52% and 48% of the portfolio, respectively.
Ventas, a publicly traded REIT, formed a joint venture in November 2020 with GIC, Singapore's sovereign wealth fund. The venture is focused on developing "research & innovation" projects.
Ventas and GIC didn't respond to Bisnow’s requests for comment on the loan.
The LEED Gold-certified Drexel property at 60 N. 36th St. is a build-to-suit project that was completed for its sole tenant in 2022.
While the building is fully occupied with a lease that runs until 2052, the Greater Philadelphia life sciences market has faced challenges amid the sector's slowdown. It had a nearly 16% vacancy rate last quarter after more than 500K SF was delivered in the first three months of the year, according to a CBRE report.
The University City submarket, where the Drexel building is located, had a 34% vacancy rate. It includes about 2.7M SF of Philadelphia proper’s roughly 5.1M SF life sciences inventory. High supply muted developer interest in speculative construction and led landlords to offer more generous concessions, according to CBRE.
Philly’s vacancy rate for life sciences properties is higher than the roughly 10% the brokerage calculated in nearby New York City and Washington, D.C., but much lower than the roughly 25% seen in Boston and San Diego, which have traditionally been life sciences strongholds.
The Assembly at 5051 Centre Ave. in Pittsburgh’s Shadyside neighborhood started its life as a Ford manufacturing plant in 1915. The Ventas-GIC joint venture redeveloped it in 2022 with a focus on historic preservation.
The property consists of two buildings. The larger 246K SF section constructed in 1915 is fully leased to the University of Pittsburgh, while the smaller 109K SF new portion is occupied by an unnamed tenant and Biohaven Pharmaceuticals. They have leases for 73K SF and 36K SF, respectively.
