CapitaLand Ascendas Reit to convert San Diego office property to life sciences building for US$40m

THE manager of CapitaLand Ascendas Reit , formerly known as Ascendas Reit, has inked an agreement with a biotech company in California to convert a San Diego office property into a life sciences property at US$40 million.

When completed in Q4 2023, the redeveloped 2-storey property – located in the Sorrento Mesa neighbourhood, a life sciences submarket in the US – will serve as Crinetics Pharmaceuticals’ new global headquarters.

The 94,230 sq ft property will be outfitted with new mechanical, electrical and plumbing systems, roof, windows and interior improvements including laboratories, office and vivarium spaces, the manager of the real estate investment trust (Reit) said in a bourse filing on Friday (Sep 30).

The energy-efficient building will have solar panels as well as extensive indoor and outdoor spalike amenities to improve employee well-being. It will be gold-certified under the US Green Building Council’s LEED (Leadership in Energy and Environmental Design) rating system.

The conversion to a life sciences space will enable the trust to ascribe a higher base rent with an annual escalation of 3 per cent and a net property income yield pick-up of approximately 9 per cent when completed, the manager said.

It added that the triple-net lease commitment of 11.5 years, with an option to extend 2 additional 5-year terms, by Crinetics Pharmaceuticals will provide the Reit with a stable income stream.

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William Tay, chief executive officer of the Reit’s manager, said this projection is expected to increase the proportion of the Reit’s life sciences properties to S$1.3 billion – or about 8 per cent of assets under management – on a pro forma basis.

Units of CapitaLand Ascendas Reit ended Friday up 1.5 per cent at S$2.69.