MLP, Deerfield Seeking $688M for Life Science Portfolio [Updated]

Big deals continue to hit the market


It may be a fraught and uncertain week for most of the industry, but deals — sizeable ones — continue to hit the market. 

MLP Ventures and Deerfield Management are seeking $688 million in floating-rate financing for a 1.7-million-square-foot life science portfolio, Commercial Observer has learned, with bids due April 14.  The request has a loan-to-value ratio of 70 percent. 

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The Discovery Labs Life Science Portfolio is 97 percent occupied by life science, healthcare and biotech tenants and located in the King of Prussia submarket of Philadelphia, Penn. MLP and Deerfield will use loan proceeds to repay existing debt, finance the acquisition of a portion of the portfolio and fund tenant improvements and leasing commissions associated with recently signed leases.

“This [portfolio has] probably the safest mix of iconic, high credit tenants available in any asset in the financing markets today,” MLP Ventures founder Brian O’Neill told CO. “It’s also in a sector that is growing exponentially and in a location in Philadelphia that is extraordinary because cell and gene therapies were invented here. So despite the difficulty the marketplace is facing and the uncertainty, this transaction will get done.”

A CBRE team led by James Millon and Tom Traynor is handling the debt assignment, lenders familiar with the financing request told CO. CBRE officials declined to comment. 

Located in the heart of “Cellicon Valley”, Discovery Labs first kicked off roughly two-and-a-half years ago. The developers viewed the market as being underserved in biotech and lab space, O’Neill said, and bought the Renaissance Park corporate center—comprising 14 buildings—from Liberty Property Trust.

“We were successful in securing the most pedigreed and high-quality credit tenants in the market place, so our hunch was correct,” O’Neill said. “Since then, we’ve had an onslaught of interest from tenants and are going to expand the buildings further because we don’t have enough space.”

Today, the campus comprises 1.7 million square feet of research and development, office, dining, daycare and fitness amenities. The two-phase campus includes the Innovation Renaissance and Innovation 411 facilities.

Phase one, Innovation Renaissance, is a 645,741-square foot value-add life sciences, healthcare and technology park that provides build-out and collaboration opportunities for tenants. It comprises 14 office, lab and last-mile distribution buildings on 80 acres. Tenants have access to walking trails as well as a fitness center, daycare and a brew pub.  

Due to its in-demand location, Discovery Labs works hand in hand with Philadelphia’s University City, as well as Cambridge, Mass., nationally,  with life sciences and healthcare tenants.

Phase two, Innovation 411, is a 1-million-square-foot facility that includes office, lab, and manufacturing space and is connected by floor-to-ceiling glass corridors and separated by indoor and outdoor atriums, per MLP’s website. Innovation 411 has the capacity to add up to 4 million square feet of expansion space. 

MLP recently signed up Children’s Hospital of Philadelphia, Jefferson Hospital and Hewlett Packard as tenants for Innovation Renaissance. Children’s Hospital of Philadelphia and Thomas Jefferson University have made their own substantial investments in additional tenant improvements, above the landlord’s contribution, underscoring their commitment to the space. 

Innovation 411 signed leases with GlaxoSmiteKline and Wuxi Biologics.

More than 100 college and universities are within minutes of Discovery Labs, including University of Pennsylvania, Drexel University and University of the Sciences

Philadelphia earned the name “Cellicon Valley” after emerging as a leader in cell, gene, and immunotherapies, attracting both talent and investment as a result. Roughly 87 percent of U.S. pharmaceutical and biotech companies have a presence in the area, according to Select Greater Philadelphia.

As the world battles to wrap its arms around the full extent of the novel coronavirus and several property types and market sectors languish, the life science industry is well positioned to keep attracting capital, O’Neill said.

“The desire to find new vaccines and prevent a repeat of this pandemic and control the supply of antibiotics and vaccines in the U.S. will be a primary focus, and that’s going to drive research and development, innovation, manufacturing and all the other components of the life science industry to new heights of demand that we’ve never seen before,” O’Neill said.

The CBRE team worked with Deerfield Management not too long ago in the healthcare investment management firm’s $540 million acquisition of 345 Park Avenue South from Aby Rosen’s RFR Holding, in which O’Neill was also a development partner. Blackstone ended up providing the debt in that transaction.

Officials at Deerfield did not immediately respond to requests for comment.

This article was updated to include comments from MLP Ventures Brian O’Neill.