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HCP discloses deal to acquire life science campus in South San Francisco

HCP Inc. in November agreed to acquire the two-building Sierra Point Towers life science and office campus in South San Francisco for $245 million.

The healthcare real estate investment trust said the 427,000-square-foot campus is adjacent to its The Shore at Sierra Point development project. It is exploring securing additional entitlements and opportunities for densification at Sierra Point Towers.

Sierra Point Towers is nearly 100% leased with a weighted average lease term of over five years.

HCP intends to accelerate phases II and III of The Shore at Sierra Point, which together will offer roughly 365,000 square feet across three class A life science office buildings with estimated development cost of $382 million. The two-building, approximately 222,000-square-foot The Shore at Sierra Point-Phase I is now fully leased, HCP said.

On Nov. 30, HCP acquired the remaining joint venture interests in four life sciences properties for a net price of $92.4 million. The deal includes two buildings with roughly 131,000 square feet in San Diego's Torrey Pines submarket and two others spanning approximately 162,000 square feet in South San Francisco.

Using proceeds from the sale of the Shoreline Technology Center campus in Mountain View, Calif., to Alphabet Inc.'s Google LLC unit and the disposition of 19 Brookdale Senior Living Inc.-managed senior housing communities, HCP said it was able to settle in the fourth quarter roughly $1.2 billion aggregate principal amount of debt and outstanding borrowings. These include $450 million aggregate principal amount of 3.75% senior unsecured notes due in February 2019, $224 million aggregate principal amount of unsecured term loan due January 2019 and $505 million of outstanding borrowings under a $2.0 billion unsecured revolving line of credit facility.

During the last quarter of 2018, HCP generated gross proceeds of roughly $156 million from the sale of its shares under its at-the-market common stock offering program. Proceeds from the sale of the shares were used to fund the acquisition of the joint venture interests and repayment of borrowings on the company's credit facility.