Friday, December 4, 2020

Saudi Investment Firm Snags $225 Million Majority Stake in Philadelphia Biotech Campus

By Cara Smith-Tenta CoStar News

 A Saudi Arabian investment engine acquired a majority stake in a life science campus in Philadelphia in a $225 million deal, part of a broader trend of Saudi capital flowing into the U.S. tech, life sciences and health care industries.

Sidra Capital, based in Saudi Arabia, acquired a 90% ownership stake in Arborcrest Corporate Campus, an 855,600-square-foot suburban office campus spanning five buildings in northern Philadelphia, according to a statement from JLL, which brokered the sale.

The sale is part of a recapitalization deal for the property’s previously sole owner, Spear Street Capital. The San Francisco-based investment firm retained a 10% ownership interest in Arborcrest Corporate Campus.

In 2016, Spear Street Capital bought the campus for $142.8 million, according to CoStar research.

According to CoStar, the campus is composed of the following properties:

  • 731 Arbor Way, a 137,680-square-foot building that was built in 1960, renovated in 2013 and is 100% leased.
  • 721 Arbor Way, a 183,000-square-foot building that was built in 1960, renovated in 2013 and is 100% leased.
  • 785 Arbor Way, a 202,962-square-foot building that was built in 1970, renovated in 2018 and is 100% leased.
  • 751 Arbor Way, a 115,749-square-foot building that was built in 1991, renovated in 2011 and is 83.2% leased.
  • 801 Lakeview Drive, a 213,412-square-foot building that was built in 1974, renovated in 2010 and is 100% leased.

Since Spear Street bought the property in 2016, a handful of sizable leases have been inked at the campus. Many of those leases were signed by companies in the pharmaceutical, tech and healthcare industries, which have gained popularity among investors as they gain more funding and expand amid the coronavirus pandemic.

Last year, Signant Health, a company that produces technologies used in medical clinical trials, leased 105,538 square feet in the campus.

The healthcare analytics company Cotiviti leased 80,187 square feet in the property in 2018. The computer technology company Unisys Corp. leased 100,000 square feet in the campus the same year.

Saudi Arabia has had a long tradition of investing in major American tech companies. CNN once called Saudi Arabia an “unofficial bank” of Silicon Valley tech companies, as a nod to just how much capital the country funnels to U.S. companies.

In 2018, some U.S. companies temporarily boycott deals with Saudi Arabia after the killing of Jamal Khashoggi, a Washington Post columnist, while at the Saudi consulate in Istanbul.

Last year, Saudi companies beefed up their investments in global healthcare and tech companies, many of which are in the United States.

One example is Saudi Arabia’s sovereign wealth fund backing a $550 million investment in Babylon, a British tech company that primarily works in health care administration.

That fund is a $360 billion sovereign wealth fund, known as the Public Investment Fund, which Saudi Arabia uses to invest in business enterprises around the world.

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