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PS Business Parks Partners has entered into an agreement with a subsidiary of Longfellow Real Estate to sell Lusk Business Park in San Diego. The property will trade for $ 315.4 million.
PS Business Parks will have net proceeds of $ 311 million from the transaction after settlement of transaction costs. Earlier this week, Longfellow Real Estate’s due diligence period ended and the purchase price deposit became non-refundable.
The net sale price represents a cap rate of 1.6% based on expected net operating income of $ 5.1 million for 2021. PS Business Parks Partners plans to use $ 50.5 million of the transaction in a 1031 exchange to acquire the Port America industrial park in Dallas, Texas. She will look for a 1031 exchange for the rest of the proceeds, but if she cannot find one, the company will pay a one-time special dividend from a portion of the proceeds of the disposition, $ 166.0 million and $ 183.5 million. dollars, or $ 4.75 to $ 5.25 per common share per unit.
The remaining net proceeds will also allow the Company to redeem its Series W preferred shares on November 3, 2021. The shares bear a preferred coupon rate of 5.2%.
Lusk Business Park is a 20.6 acre campus with 1.8 million square feet of life science development potential. Mac Chandler, President and CEO of PS Business Parks Partners, Says Life Sciences Development Potential commercializes the property “extremely valuable” due to significant demand for space for life sciences in San Diego. Since March 2020, demand for lab space increased 280%, according to JLL research. Demand drives both rental and investment activity in the market.
As a result, assets that can meet the demand for life sciences trade at high prices. City Office REIT, for example, Between entered into definitive agreements to sell all of its life sciences interests in San Diego’s Sorrento Mesa submarket for $ 576 million. The properties are traded without any debt to an anonymous buyer. And, in July, KBS assisted Prime US REIT in the purchase of Sorrento Towers, an office, technology and life sciences center in San Diego for $ 146 million. Shorenstein Properties sold the office building to Prime, and KBS completed the transaction and will serve as US-based asset manager on behalf of Prime.
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