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BioRegion Real Estate: Jul 6, 2009

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Genentech Adds 500 Forbes Blvd. to South San Francisco Presence; Parent Roche Pulls Out of PhRMA

Genentech, the biotech pioneer headquartered in South San Francisco, Calif., has expanded its presence in its home city by agreeing to lease 156,000 square feet at 500 Forbes Blvd., the space formerly occupied by cancer therapy developer Cell Genesys, the San Francisco Business Times has reported.

The space became available earlier this year after Cell Genesys terminated its leases for all of its major facilities — including 500 Forbes, which is owned by publicly traded Alexandria Real Estate Equities of Pasadena, Calif. The retrenchment followed Cell Genesys' Oct. 16, 2008, announcement that it was restructuring its business operations following the failure of its GVAX immunotherapy for prostate cancer during two phase 3 clinical trials.

"We would have been obligated to make rental payments of approximately $86 million through the lease expiration in 2018 for South San Francisco" absent a termination, Cell Genesys said in a filing with the US Securities and Exchange Commission.

In connection with the end of the Cell Genesys lease, Alexandria recorded $18.5 million in rental income that "includes the fair value of building improvements and equipment which was received in the modification of the lease and recognized over the remaining term of the applicable lease," according to a 10-Q filing by the real estate investment trust with the US Securities and Exchange Commission.

On a May 7 conference call with analysts, Alexandria disclosed that the space was re-leased, but declined to identify Genentech as its new tenant.

"This opportunity to exit the former tenant, to stabilize the property with a credit tenant, we felt, clearly was the appropriate business decision. It gave us the best economics for the property for the long term," Dean Shigenaga, Alexandria's chief financial officer, told analysts. "We feel pretty comfortable that that property is going to perform well in the long term. At the end of the day, we're ahead on total consideration under the new lease."

The lease is one of the first deals inked by the biotech pioneer since its $47 billion acquisition by Swiss-owned Roche earlier this year.

Roche also made news last week when the company — which has adopted the Genentech name for its US operations — dropped out of the pharma industry trade group Pharmaceutical Research and Manufacturers Association, or PhRMA, in a reflection of the company's reorientation toward biotech. Roche also plans to end its sponsorship of a special pharmaceutical management program at Rutgers Business School, the Star-Ledger of Newark, NJ, reported.

Instead, Genentech has become a member of the Biotechnology Industry Organization: "Genentech and Roche believe BIO's purpose is closely aligned with the direction of the new company and, therefore, can represent the company's interest in Washington," company spokeswoman Darien Wilson said in a statement to the Star-Ledger last week.


Sanofi-aventis Plans France Consolidations, Eyes Shifts Elsewhere, in R&D Restructuring

Sanofi-aventis said it will consolidate operations in the Paris and Toulouse regions and may also consolidate operations in the US, Spain, the UK, and Japan as part of a restructuring of R&D operations.

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The world's third-largest pharma giant said it will proceed with previously announced transfers of personnel and activities in the Paris area, from the "discovery research" facilities in Bagneux, and Rueil-Malmaison to Chilly-Mazarin — where operations now in Evry will also be shifted. Approximately 300 people may be affected by the consolidations, which may include grouping "tertiary activities" at Chilly-Mazarin as well as Massy, an option Sanofi-aventis said it is now considering.

In the Toulouse area, the company will shift the Labège site’s activities and 150 staffers to the namesake Toulouse site. However, Sanofi-aventis said it is looking into "a divestment solution" for its Porcheville site, which employs approximately 200 people.

Sanofi-aventis said it is also examining selling of converting preclinical research labs in the US, Spain, the UK, and Japan. The company's US facilities include a flu vaccine production site in Swiftwater, Pa., where more than 2,000 people were employed last year, making it among the largest employers in Pennsylvania's Monroe County, according to the Morning Call of Allentown, Pa.


Lab Supply Company Takes 148 Sq. Ft. at Brandywine-owned Radnor, Pa., Building

VWR International, a global laboratory supply and distribution company whose customers include pharmaceutical and biotech companies, has signed a 14-year lease for 148,000 square feet at One Radnor Corporate Center, a 201,980-square-foot office building in Radnor, Pa., owned by publicly traded Brandywine Realty Trust.

Brandywine, which announced the lease deal, said VWR International will occupy the Radnor property in stages beginning in February 2010. The lease will increase occupancy to 90 percent in Brandywine's Radnor portfolio, which consists of 10 buildings totaling approximately 1.7 million square feet.

VWR International was represented by David Binswanger and Scott Gabrielsen of Binswanger. Brandywine was represented by Richard McGuckin and Daniel Palazzo. Brandywine is a real estate investment trust that owns, develops and manages a primarily Class A, suburban and urban office portfolio totaling about 37.3 million square feet.


PPD Drops Plans for 40K Sq. Ft. Building at North Carolina Research Campus

PPD, a contract research organization headquartered in Wilmington, NC, said it has terminated its lease for 40,000 square feet at the North Carolina Research Campus, citing the ongoing economic upheaval and its effect on the development of the Kannapolis, NC, complex spearheaded by billionaire food/real estate magnate David H. Murdock.

“Progress in developing, constructing and recruiting tenants to the North Carolina Research Campus has been much slower than we expected. We understand that this is the result of the economic conditions and the global financial crisis," PPD said in a statement to several North Carolina news outlets. "Construction of the building we intended to lease has not commenced. As a result, we elected to terminate our lease. Despite this development, we have informed NCRC that we would like to continue to work closely with them to evaluate ways in which we can participate in the campus.”

PPD announced its intent to expand into NCNC last year [BRN, April 14, 2008], projecting at the time that it would create as many as 300 new jobs over three years, in positions that included clinical research associates, project managers, and scientific staffers.

Soon after, PPD established a temporary office within The Village, a Kannapolis complex on the outskirts of the campus that was supposed to be supplanted by the permanent space at NCRC. That operation housed about 20 employees before shutting down recently.

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PPD was to share space in a new four-floor, 160,000-square-foot building with Carolinas HealthCare, but the project has seen repeated delays, and still has no timetable for starting construction, which was projected to last 14 months. According to the Charlotte Business Journal, the project ran into delays as NCRC developer Castle & Cooke North Carolina worked to secure financing.

While Carolinas HealthCare has told the newspaper it is reviewing its plans for the campus, Castle & Cooke's Clyde Higgs, vice president of business development, issued a statement via e-mail to the Business Journal declaring that it remains excited about “PPD continuing their partnership with the campus into the future."

The newspaper said Higgs did not respond to its requests for additional information — but quoted a PPD spokeswoman, Sue Ann Pentecost, as saying the company would continue to evaluate ways it can participate in the campus.

Hal Kempson, director of CBRE Capital Markets, told the Business Journal that Castle & Cooke may change the medical building PPD was to occupy, from a single large building that would have required $45 million in financing, to several smaller ones, each likely to need less money to build. Kempson's firm — which financed the building Rowan Cabarrus Community College is now constructing at NCRC — hopes it can finance the medical space as well.

PPD is one of 18 private businesses that have announced plans to locate at the $1.5 billion, 350-acre NCRC, where eight NC universities and the state’s community college system also have a presence on the campus.

PPD's pullout was the second setback for the NCRC in recent weeks. Earlier plans by PepsiCo for a lab at the site are “in flux” because of the economy, the Charlotte Observer reported.

Like NCRC, PPD has also struggled to weather the economic storm. The company cut its guidance for the year in April, citing an “unprecedented” number of project cancellations, and the state of the pharmaceutical industry — though the company has also expanded overseas after acquiring AbCRO.


UMass Medical School Builds Data Center at Worcester Campus, with Tishman as Manager

Construction has begun on a new data center and supporting infrastructure to serve the University of Massachusetts Medical School in Worcester, Tishman Construction Corp. of Massachusetts, the project's construction manager, announced.

The project broke ground in May and is scheduled to reach its planned height or "top off" in March 2010, Tishman said in a statement.

“This data center will be extremely energy efficient, utilizing new technologies such as flywheel-backed [uninterruptible power supply] systems and air side economizing. By removing all HVAC components from the Data Center box while providing complete system monitoring, we can essentially turn off the lights,” Paul Hanbury, a professional engineer and senior mechanical project manager at UMMS, said in the statement.

The data center will be part of an existing 225,000-square-foot building where 30,000 square feet of impacted space will be renovated and 7,000 square feet of white space created for the project, according to GlobeSt.com.

Tishman was hired by a state-created nonprofit affiliated with the med school, the Worcester City Campus Corp.


BioMed Realty Secures $350M in Financing for Center for Life Science|Boston

BioMed Realty Trust said it has secured a $350 million loan toward construction of its 700,000-square-foot Center for Life Science|Boston. The company obtained the loan from John Hancock Life Insurance, TIAA-CREF, and Westdeutsche Immobilien Bank AG.

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In a statement, the San Diego-based, publicly traded laboratory developer said the $350 million loan carried an interest rate of 7.75 percent, and will mature in June 2014. BioMed Realty said the loan allowed it to pay off part of a $507 million debt that is set to mature later this year. BioMed Realty said it paid down the remainder by drawing on its unsecured line of credit.

Located in Boston's pricey Longwood Medical Area, the CLS has attracted a tenant roster that includes Beth Israel Deaconess Medical Center, Children's Hospital Boston, Dana-Farber Cancer Institute, Immune Disease Institute, and Japanese-based Kowa Company Ltd. The center recently received the "gold" rating for energy efficiency based on the US Green Building Council's Leadership in Energy and Environmental Design standards.


Expansion of NYC's Javits Convention Center Clears Last State Government Hurdle

New York Gov. David Paterson announced last week that construction of a $463 million expansion of the Jacob K. Javits Convention Center in New York City " will begin immediately" after the state Public Authority Control Board approved the a general project plan for the work.

In a statement, Paterson said the expansion “will generate close to $880 million in direct and indirect sales, as well as 9,000 direct and indirect construction and construction related jobs."

The center would add 40,000 square feet of new exhibition space within a total 100,000 square feet of new construction. The expansion would increase the amount of exhibition space at Javits, which opened in 1986, from the current 675,000 square feet to 715,000 square feet, making it the nation's 18th largest convention center.

The city announced its expansion plan March 20, as part of a bid to host a future Biotechnology Industry Organization international convention. BIO responded by saying it would study the plan; the group last held an annual convention in the Big Apple in 1998 [BRN, March 30].


Dendreon More than Doubling Seattle HQ; Scouring Waterfront, South Lake Union for Space

Dendreon plans to more than double the size of its headquarters near downtown Seattle, and is seeking approximately a quarter-million square feet of office and laboratory space along the city's waterfront or South Lake Union neighborhood, Chief Financial Officer Greg Schiffman has told the Puget Sound Business Journal.

"We’re looking to remain in the downtown region. We are looking at buildings that are in place or could be built within a couple years' time frame," Schiffman told the newspaper. "If we find the right facility, we’re ready to move in the next couple of months to make a decision."

The Seattle office of real estate services firm Jones Lang LaSalle is representing Dendreon in its search for space. The new Seattle headquarters will house the product sales and marketing division, as well as laboratory space for research and development of other promising products in the biotech’s pipeline, Schiffman said.

Dendreon currently leases a total of 95,000 square feet by the Seattle waterfront under two leases at 3005 First Ave. and 3101 Western Ave. The leases are set to expire in 2011.

Bill Neil, a senior vice president at GVA Kidder Mathews, told the Business Journal that several buildings or proposed projects could accommodate Dendreon’s 250,000-square-foot space requirement within its time frame.

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He cited developer Martin Selig’s 320,000-square-foot 635 Elliott Building; BioMed Realty Trust’s building at 201 Elliott Ave. W.; developer Bruce Blume’s 1100 Eastlake Building, or proposed buildings in the planned expansion of his Yale Campus on Yale Avenue North just south of the Mercer Street interchange; Capstone Partners’ proposed 450,000-square-foot Dexter Station at 1100 Dexter Ave. N.; and Touchstone’s 228,000-square-foot Northlake Technology Center.

Seattle isn't the only place where Dendreon is expanding. Last week, the company said in a filing with the US Securities and Exchance Commission it plans to spend up to $50.5 million to expand its therapeutic biotechnology-processing facility in Morris Plains, NJ, to allow for commercial production of its new prostate-cancer immunotherapy, Provenge.

Dendreon has hired the Henderson Corp. to manage construction of a two-phase expansion of the Morris Plains facility. The first phase calls for additional quality-control laboratories, data center, training areas, infrastructure and offices, all of wehi are scheduled to by done by mid-December. The final phase, with additional manufacturing clean-room work stations, production-support areas, warehouse, infrastructure and offices, is to be substantially complete by late April.

Dendreon finished the initial build-out of its 158,000-square-foot facility in July 2006.


Agency Overseeing Ex-South Weymouth (Mass.) NAS Redevelopment Rejects Developer's $250K Offer

The South Shore Tri-Town Development Corp., a Massachusetts state agency that is overseeing the redevelopment of the former South Weymouth Naval Air Station, has turned down an offer of $250,000 from developer LNR Property to balance its budget for the fiscal year that ended June 30, the Weymouth News has reported.

Tri-Town Chief Executive Officer Kevin Donovan told the News that the agency could not accept LNR’s financial offer because it had too many conditions attached to it. One stipulation would have prohibited Tri-Town — a joint venture of Weymouth and nearby Abington, Mass., and Rockland, Mass. — from issuing press notices or making statements in the media about its relationship with LNR.

Other conditions included Tri-Town accepting the money in monthly installments, and showing good faith efforts to facilitate the redevelopment proposed by LNR, Bill Ryan, a spokesman for the developer, told the newspaper. He said Tri-Town also had to show LNR a plan for obtaining bonds to cover the cost of constructing new infrastructure, a wastewater treatment plant, and a parkway on the southern tier of the base.

“We recognize that there are market conditions, capacity issues, and technical challenges, but we need to see a structure that meaningfully shows that they are serious about getting these things done," Ryan told the News. “Over the last six years, we have paid Tri-Town $12 million to cover costs, but we can’t keep doing that if the public partner is not performing and we are not seeing evidence of them performing that shows an end gain."

Donovan said Tri-Town is "actively working on" plans to show how it attempting to obtain bonds to finance the construction of amenities connected to the redevelopment.

LNR and Tri-Town have squabbled in recent months over each other's ability to finance the redevelopment — though both have publicly stated they remain committed to the project [BRN, June 5]. The redevelopment would include a 2 million-square-foot commercial complex designed to accommodate a pharmaceutical company or biotechnology firm — part of much broader redevelopment plans for the shuttered military outpost.

LNR is installing new infrastructure on the northern tier of the base to service the first 500 condominiums that will be built at the base. Plans call for 2,855 housing units in a new community called SouthField, through a mix of housing types that include rentals, apartments, condos, townhouses, single-family homes, and senior apartments. LNR's plan also includes a hotel, an 18-hole golf course, a hotel, a conference center, boutique shops, restaurants, hiking baths, walkways, and recreational fields.

The timeline for constructing these amenities has been pushed back because of Tri-Town's difficulty in obtaining bonds, which the agency blames on the ongoing economic upheaval. Some of those bonds will repay a $35 million loan to LNR to cover the cost of installing new infrastructure for the project’s initial phase.


The Scan

Omicron's Emergence

The World Health Organization has called Omicron a SARS-CoV-2 "variant of concern," the Los Angeles Times writes.

Not as Much

Merck's pill to treat COVID-19 reduces the risk of hospitalization and death among COVID-19 patients by less than previously reported, the New York Times says.

Bats That Hang Together

Discover magazine writes that researchers have found a social microbiome among vampire bats.

PLOS Papers on CEWAS, Simian Varicella Virus Transcriptome, Dermatomyositis Markers

In PLOS this week: multi-omic approach to home in on genetic risk variants, transcriptomic analysis of the simian varicella virus, and more.