Health Care Property Commits to $2.9B Estates USA Buy

June 04, 2007 By Barbra Murray, Contributing Editor

Health Care Property Investors Inc. is about to add a sizable portfolio of life science/pharma properties to its holdings. The Long Beach, Calif.-based healthcare property-focused REIT has singed a definitive agreement to purchase Chicago-headquartered Slough Estates USA Inc., a subsidiary of behemoth British real estate firm SEGRO Plc, for $2.9 billion in cash.

The cash transaction, to be financed by a $3 billion bridge loan that HCP has already secured, includes HCP's assumption or refinancing of Slough's approximately $1.2 billion in existing debt. In exchange for its lump sum payment, HCP will walk away with Slough's 5.2 million-square-foot portfolio of 83 high quality life sciences, office, R&D and light industrial properties in the San Francisco Bay area and San Diego County, including the 50-acre Poway Business Park (pictured) in San Diego. The portfolio boasts a list of credit tenants such as Genentech Inc. and Amgen Inc., which maintain campuses in South San Francisco. Additionally, Slough's assets encompass its existing pipeline of 3.8 million square feet in the San Francisco and San Diego areas, as well as a future development pipeline of 3.3 million square feet that will be constructed as market demand dictates. The deal calls for Slough to stay on to manage the portfolio. Assuming SEGRO shareholders will sign off on the transaction, a closing will likely take place during the third quarter of this year.

For SEGRO the deal represents an exit from the U.S. market, giving the company the opportunity to focus on further developing its business space model in Europe, and to reap the rewards of the value created by the U.S. portfolio. HCP, which has a diverse healthcare portfolio that includes laboratory facilities, will become a visible presence in the life science real estate market. HCP's real estate assets, valued at a total of $9.4 billion, consist of 730 healthcare properties, including senior housing, medical office buildings, hospitals, skilled nursing facilities. The company's opened at $31.95 today.

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