https://www.bizjournals.com/sanfranc...nnis-club.html
Alexandria to forge ahead with S.F. Tennis Club development
"Alexandria Real Estate Equities executives indicated Tuesday that the company plans to move forward with development of the 1 million-square-foot project at 88 Bluxome St. despite losing anchor tenant Pinterest Inc.
As I reported previously, Pinterest announced in August that it had terminated a 490,000-square-foot lease signed just last year at the South of Market location, forfeiting an $89 million deposit. The plan was to build a mixed-use development with two high-rise office buildings over ground-floor retail and PDR uses to replace the San Francisco Tennis Club in partnership with TMG Partners.
Sources have told me that Alexandria is considering the recapitalization of some of its office portfolio in an effort to focus on life sciences, casting doubt over the future of the unbuilt 88 Bluxome development. But during a third-quarter earnings call on Tuesday, Alexandria co-CEO Stephen Richardson described the project as a “lab-ready shell” and indicated that few changes would have to be made to build out the site for life science users.
“At 88 Bluxome we have important pre-construction activities that we will be undertaking in the next several quarters,” said Richardson. “We have ... capability for shipping and receiving. It’s a mid-rise facility with a lot of outdoor space. (We have) the capability to go lab. We think it will be an extremely desirable product. We will see this time next year where we are at.
“From the outset we designed it as a lab-ready shell. We have the ability to accommodate both lab and technology users,” he added.
Alexandria sold a key asset at 945 Market St. — the long-vacant, 250,000-square-foot 6X6 mall — for $198 million last month to Ikea-sister company Ingka Centres, realizing an approximately $19 million profit. Alexandria bought that property in partnership with TMG last year for $179 million.
Asked by analysts why the company moved to offload 945 Market but is planning to keep 88 Bluxome in its portfolio, Richardson said the company received an “unsolicited offer” for the vacant mall and that its location on Market Street did not necessarily lend itself for further development.
“It was a one-off at the edge of a cluster in the South of Market. It made sense to go ahead and exit,” said Richardson. “I think the scale and size of 88 Bluxome is much different and qualitatively in a different position. You are at the edge of Mission Bay there. You have the opportunity at scale for life science and tech whereas the Market Street location was a smaller project there. We weren't going to build a cluster around it there. Receiving an unsolicited offer and recycling that asset … made sense.”
Alexandria Executive Chairman and Founder Joel Marcus was reluctant to comment on the company's plans to shrink its office portfolio in the city, but said simply that in regard to the 945 Market sale that “you have to look at that in isolation and the circumstances that led us to make that disposition.”
As I reported previously, sources have said Alexandria is quietly considering selling a seven-story, 300,000-square-foot office building at 510 Townsend St. entirely leased to payment company Stripe. Stripe plans to relocate to South San Francisco in 2021 and is seeking to sublease all of its space at 510 Townsend St., where its lease expires in 2027.
The Alexandria executives did not comment on the company’s plans for 510 Townsend on Tuesday. However, Richardson confirmed Stripe’s plans to sublease the space.
“Stripe’s plans for subleasing were always the case with the relocation to South San Francisco. They haven't done anything official yet. I think they are just putting some feelers out. That’s TBD,” he said.
President and Chief Financial Officer Dean Shigenaga said the company currently has “two key transactions” in the works, with “one expected to close soon.”
“Both deals are in process,” said Shigenaga, but did not say where the assets are located.
According to Alexandria’s earnings release, the company does plan to sell more of its assets, including in San Francisco.
Per the earnings release, the company has pending dispositions worth between $500,000 and $600,000 in the San Francisco market projected to close in the fourth quarter. Another pending transaction worth between $200,000 and $300,000 was announced in Seattle. The report didn't provide additional details.
On Tuesday, Alexandria reported $3.9 billion in liquidities in the third quarter."