Alexandria Real Estate Equities, Inc.
) - a real estate investment trust (REIT) - have divested 3
clustered legacy assets for $40.3 million. The sale is in
accordance with the company's asset-recycling strategy.
, 3 newly formed non-profit subsidiaries of the University of
Massachusetts Medical School have purchased these assets for
possible future development.
The 3-clustered legacy assets comprise of 300,000 rentable square
feet situated in Worcester, Mass. Alexandria purchased
these assets - One Innovation Drive, 377 Plantation Street and
381 Plantation Street - in 1999 for unlevered cash yields of
Worcester Business Development Corporation developed One
Innovation Drive and 377 Plantation Street. These were part of
the country's first purpose-built biotechnology park - the
Massachusetts Biotechnology Research Park (MBRP). 381 Plantation
Street was later developed at MBRP.
The divestment proceeds are likely to be utilized for
reinvestment into higher value Class-A, CBD assets in Cambridge,
Mass. Alexandria follows a strategy of asset recycling through
which it monetizes limited non-strategic operating assets along
with considerable non-income-generating plots of land.
Alexandria believes this strategy to be a useful source of
internal capital generation which considerably reduces the need
to issue new common equity.
The contractual termination dates of in-place leases is probably
going to boost vacancy to 48% in 2013 as tenants, including
associates of University of Massachusetts Medical School and
Quest Diagnostics Incorporated, move to bigger, single-tenant
facilities outside of the MBRP.
Alexandria has always been of the opinion that assets are best
positioned for alternative uses, given the current market trends.
However, for these specific assets, the company finds it
lucrative to sell assets rather than invest considerable capital
to reposition these for alternative uses.
Pasadena, CA-based Alexandria Real Estate is a major owner and
leading life science real estate company, focused chiefly on
science-driven cluster development through the ownership,
operation, management, and selective acquisition, development,
and redevelopment of properties containing life science
Currently, Alexandria carries Zacks Rank #3 (Hold). Other stocks
in the same sector that are performing quite well and worth
considering for investment include
MHI Hospitality Corp.
Omega Healthcare Investors Inc.
Ryman Hospitality Properties, Inc.
). All these carry Zacks Rank #1 (Strong Buy).
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