$700 Million (!!!) Research Park

Question for Daddy UCLAbucks.

Recall our recent posts about UCLA's purchase of the Westside Pavillion?* Here is the latest:

After $700M Deal, UCLA To Transform Westside Pavilion Into Research Park

Project previously dubbed One Westside, it was set to be massive Google office developed by Hudson Pacific Properties and Macerich

By Greg Cornfield, January 3, 2024, Commercial Observer

Hudson Pacific Properties and mall giant Macerich have sold the projects known as One Westside and Westside Two in Los Angeles in a landmark $700 million deal with the University of California.

UCLA announced Wednesday will transform the 687,000-square-foot property on L.A.’s Westside into a large-scale research park. This comes after CO reported the property is likely destined for a life sciences redevelopment following news that UCLA was looking to acquire the former shopping center portion that was intended to be a large-scale trophy office fully leased to Google (GOOGL) through 2036.

The research park will house the California Institute for Immunology and Immunotherapy at UCLA and the UCLA Center for Quantum Science and Engineering, as well as programs across the disciplines, the university said.

HPP held a 75 percent interest and Macerich a 25 percent interest in the joint venture that owned the assets. Google had signed a 14-year lease that was announced five years ago in 2019, and commenced in 2022. It was set to generate $43.2 million of net operating income annually for HPP. It is not immediately clear the status of that lease. The Mountain View-based company has been spending hundreds of millions of dollars cutting office leasing, but that had not yet included the West Pavilion project.

The sale of 10800, 10830 and 10850 West Pico Boulevard to UC is a godsend for studio and office landlord HPP, which suffered through the Hollywood strikes last year and has been unloading underperforming office properties from its portfolio.

“The opportunistic sale of One Westside and Westside Two significantly bolsters our balance sheet and we now have no debt maturities until year-end 2025,” Victor Coleman, chairman and CEO of HPP, said in a statement.

Macerich CEO Tom O’Hern said net proceeds will enable the firm to “further deleverage and improve our liquidity profile, allowing us to more aggressively advance Macerich’s successful densification-diversification strategy” of adding new uses to residential, hotel and office space.

UCLA has been an active buyer in commercial real estate this year. In June, the university acquired the historic Trust Building in Downtown L.A. for less than $40 million to expand with new classrooms and administration offices. UCLA also acquired a 24.5-acre campus in Rancho Palos Verdes and an 11-acre residential site in San Pedro for $80 million in January 2023.

Source: https://commercialobserver.com/2024/01/la-sale-ucla-hudson-pacific-google-life-sciences/.

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*https://uclafacultyassociation.blogspot.com/2023/12/about-yesterdays-post-on-purchase-of.html; https://uclafacultyassociation.blogspot.com/2023/12/another-ucla-real-estate-purchase.html.