PASADENA, Calif., Feb. 25, 2013 /PRNewswire/ -- Alexandria Real Estate Equities, Inc. (NYSE: ARE), the leading owner, operator, and developer of high-quality, sustainable real estate for the broad and diverse life science industry, announced today that affiliates have sold three clustered legacy assets aggregating approximately 300,000 rentable square feet located in the Worcester, Massachusetts submarket for approximately $40.3 million. Alexandria intends to reinvest the proceeds from these suburban assets into higher value, Class-A, CBD assets in Cambridge, Massachusetts. This sale is consistent with Alexandria's asset recycling strategy in which the Company monetizes a limited number of non-strategic operating assets as well as significant non-income-producing land parcels. Alexandria believes that this is an important source of internally generated capital and will minimize the need to issue common equity.
Alexandria purchased the three Worcester assets – One Innovation Drive, 377 Plantation Street, and 381 Plantation Street – in 1999 for unlevered cash yields of approximately 13%. One Innovation Drive and 377 Plantation Street, which were developed by the Worcester Business Development Corporation, a non-profit business organization focused on strengthening Worcester's position as an economic leader in Massachusetts, were part of the country's first purpose-built biotechnology park, the Massachusetts Biotechnology Research Park (MBRP). When Alexandria purchased the assets, Tom Andrews, the then Executive Director of MBRP, joined Alexandria's team and later oversaw the development of 381 Plantation Street at MBRP. Today, with over 25 years of experience in life science real estate and almost 14 years with Alexandria, Mr. Andrews is currently an Executive Vice President and Regional Market Director of Alexandria's Greater Boston cluster.
The contractual expiration dates of in-place leases will likely increase vacancy to 48% in 2013 as major client tenants, including affiliates of University of Massachusetts Medical School and Quest Diagnostics Incorporated, relocate into larger, single-tenant facilities outside of the MBRP. In evaluating the potential releasing strategy given current market dynamics, Alexandria believes that the assets would be best positioned for alternative uses. Given Alexandria's dominant position in the leading submarkets of Cambridge and Route 128, as well as its ideally located and state-of-the-art development in the Longwood Medical Area, the Company determined it advantageous to sell the assets rather than invest significant capital to reposition the assets for alternative uses. The buyer is an abutting institution that acquired the assets for future potential expansion space.
Alexandria is the dominant life science owner, operator, and developer in the Greater Boston cluster with approximately 4.2 million rentable square feet (including development and redevelopment assets) located adjacent to world-renowned academic and medical institutions in the Cambridge, Route 128, and Longwood Medical Area submarkets. Alexandria currently serves approximately 100 life science client tenants in the Greater Boston cluster including ARIAD Pharmaceuticals, Inc., Biogen Idec Inc., Dana-Farber Cancer Institute, Inc., Eisai Co., Ltd., GlaxoSmithKline plc, the Massachusetts Institute of Technology, Novartis AG, The Ragon Institute of MGH, MIT and Harvard, and Sanofi.About Alexandria Real Estate Equities, Inc. Alexandria Real Estate Equities, Inc. (NYSE: ARE), a self-administered and self-managed real estate investment trust (REIT), is the largest and leading investment-grade REIT focused principally on owning, operating, redeveloping, developing, and acquiring high-quality, sustainable real estate for the broad and diverse life science industry. Founded in 1994, Alexandria was the first REIT to identify and pursue a primary focus on the laboratory niche and has since had the first-mover advantage in every core life science cluster location including Greater Boston, the San Francisco Bay Area, San Diego, New York City, Seattle, Suburban Washington, D.C., and Research Triangle Park. Alexandria's high-credit client tenants span the life science industry, including renowned academic medical research centers, multinational pharmaceutical companies, public and private biotechnology entities, U.S. government research agencies, medical device companies, industrial biotechnology companies, venture capitalists, and life science product and service companies. As the recognized real estate partner of the life science industry, Alexandria has a superior track record in driving client tenant productivity, collaboration, and innovation through its CBD locations adjacent to leading academic medical research centers, best-in-class laboratory/office space, unparalleled life science real estate expertise and services, and longstanding and expansive network in the life science community, which we believe result in higher occupancy levels, longer lease terms, higher rental income, higher returns, and greater long-term asset value. For more information, please visit www.are.com. This press release contains forward-looking statements within the meaning of the federal securities laws. Actual results may differ materially from those projected in the forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained in our Annual Report on Form 10-K and our other periodic reports filed with the Securities and Exchange Commission.