Regeneron to Buy Headquarters Property in Blockbuster $720M Deal

John Jordan | January 2017

The Landmark at Eastview

TARRYTOWN—Regeneron Pharmaceuticals, Inc. has entered into a purchase agreement with the owner of the Landmark at Eastview, an affiliate of BioMed Realty, L.P., to acquire the nearly 1.5-million-square-foot office and laboratory complex on approximately 150 acres for $720 million.

The fast-growing pharmaceutical firm reported the transaction in its Form 8-K filing with the Securities and Exchange Commission on Dec. 30. The deal was first reported in the Westchester County Business Journal.

In the filing, Regeneron stated that it hopes to close the purchase transaction in the first quarter of this year. The company expects to fund the purchase with new financing and has entered into an agreement with Banc of America Leasing & Capital, LLC to arrange a $720-million lease financing. Part of the financing will involve Regeneron assigning some or all of its rights under the purchase agreement to an affiliate of Banc of America Leasing & Capital and subsequently lease its corporate headquarters property from BAL for a term of five years. At the end of the lease term, there is an option for Regeneron to extend the lease, purchase the property or sell the property to a third party.

Regeneron in its SEC filing and in a statement released to Real Estate In-Depth stated that it expects its rental payments under the new purchase-lease structure to be lower than those under the company’s existing lease for its corporate headquarters with BioMed Realty Trust. In its statement, Regeneron added that the purchase/lease deal would also provide the company “with operational control of our site and future development plans.” According to its SEC filing, the Landmark at Eastview also offers approximately 500,000 square feet of future development rights.

Regeneron Pharmaceuticals currently occupies approximately 80% of the 1.5-million office-laboratory complex.
Regeneron Pharmaceuticals currently occupies approximately 80% of the 1.5-million office-laboratory complex.

“Regeneron has grown rapidly as we advance our mission of bringing important new medicines to people with serious diseases. Of our more than 5,000 employees, approximately 2,500 are based at our Westchester County, NY corporate headquarters and we continue to plan for future growth in the region.  To that end, after over 25 years as a tenant, Regeneron has entered into an agreement with our current landlord to purchase our existing headquarters campus in Westchester (Landmark at Eastview),” the company stated.

Rick Howe, senior director, corporate communications for BioMed Realty, confirmed the purchase agreement between the Blackstone subsidiary and Regeneron. BioMed Realty acquired the Landmark at Eastview in 2004 and since then has increased the size of the property by 87% or 658,000 square feet involving two expansions by Regeneron, the most recently being completed in 2015. Once the Landmark at Eastview sale is completed, BioMed Realty’s remaining New York State holding is the Ardsley Park life science campus, which totals approximately 209,283 square feet of rentable space and is home to Acorda Therapeutics. According to BioMed Realty’s website, the property has approximately 500,000 square feet of future development potential.

While he did not provide specifics on when sale negotiations began, Howe did tell Real Estate In-Depth that due to the structure of the deal, the transaction “was something both sides had been working on for a length of time.”

In addition to Regeneron, which leases approximately 80% of the existing space at the Landmark at Eastview, there are about 12 other tenants leasing space at the complex, including: Progenics Pharmaceuticals (approximately 72,000 square feet); Momentive Performance Materials (approximately 67,000 square feet); PsychoGenics (approximately 36,000 square feet); Bayer Healthcare (approximately 27,000 square feet); Xerox (approximately 25,000 square feet) and Profectus Biosciences (approximately 10,000 square feet).

Regeneron has been very active in the local real estate market of late. In September of last year Regeneron officials made a presentation to the Greenburgh Town Board on plans that could involve as much as one-million square feet of new development on property the company owns adjacent to the Landmark at Eastview.

Greenburgh officials stated at the time that the proposal could secure approvals in about four to six months or by this spring. At press time the proposed development project is still pending before the Greenburgh Town Board.

Regeneron, in a prepared statement last September, said that the company is pursuing the development for its projected growth, but has not determined when and if the new space in Greenburgh would be built.

The company is seeking approvals from the town for nine buildings totaling 1,016,190 square feet of research and development and related space, including five parking structures (approximately 2,500 parking spaces), and related improvements. Regeneron owns the 100.17-acre parcel that is situated entirely in the Town of Greenburgh on the west side of Saw Mill River Road (Route 9A) approximately 300 feet from the intersection of Old Saw Mill River Road and Grasslands Road (Route 100C). The property is located in the town’s Planned Economic Development District.

Regeneron affiliate Loop Road Holdings made a presentation to the Greenburgh Town Board in a work session on Sept. 6. Joanne Deyo, vice president, facilities for Regeneron Pharmaceuticals and Loop Road Holdings, led the presentation. The nine buildings would be built on 60 acres.

Regeneron acquired the undeveloped parcel in May 2015 for $73 million. Recently, the firm also purchased the New York Life Insurance complex in Sleepy Hollow for $50 million, according to a report in the Westchester County Business Journal.

 

John Jordan
Editor, Real Estate In-Depth