IQHQ Gets $581M Loan for Bay Area Multi-Use Campus

The biotech REIT IQHQ has secured a $581M in construction financing for its Elco Yards office and life science campus in Redwood City, CA.

The five-year loan was co-originated and co-funded by KKR Real Estate Finance Trust and KKR affiliates, according to an earnings release. KKR said in a statement that its trust covered a quarter of the loan but declined to disclose the other lenders.

According to KKR’s earnings statement, the collateral on KKR’s floating-rate senior loam is the project’s commercial component, which is substantial.

IQHQ is redeveloping six downtown blocks along Redwood City’s Caltrain corridor on the San Francisco Peninsula. The district will have 540 apartment units and 600K SF of office and life science space that the company is building on spec, with four buildings to be delivered in 2024.

IQHQ acquired the 8-acre site for Elco Yards in an $43M transaction with JP Morgan and Greystar. IQHQ is partnering with Greystar on the three-building multifamily component.

The multi-faceted biotech REIT is in the midst of building a $1.6B R&D hub in a downtown waterfront district in San Diego. In August, the REIT purchased the Hyatt Regency La Jolla Aventine hotel in the city for $216M.

The deal is the second priciest hotel trade in San Diego in the past five years, eclipsed only by the sale late last year by the $227M sale of the Embassy Suites La Jolla.

The purchase price for the 416-room Hyatt, which translates into about $500/room, is nearly double what the seller Singapore-based GAW Capital Partners, paid for it in a $122M transaction in 2019.

The 16-story Hyatt Regency, built in 1989 and designed by post-modern architect Michael Graves, underwent a $10M renovation last year.

In addition to the iconic Hyatt, developer IQHQ also has scooped up two office buildings occupying a 12-acre site on La Jolla Village Road adjacent to the hotel. IQHQ purchased the Aventine Atrium next door to the Hyatt for $11M; last year, the REIT bought the adjacent 11-story Aventine Office Building for $170M and a nearby retail property, including restaurants for $35M.

Tenants at the office building include CoStar, WeWork and JLL, according to a report in the San Diego Union-Tribune.

IQHQ is developing the $1.6B San Diego Research and Development District on a waterfront site in San Diego previously known as the Manchester Pacific Gateway. The life sciences hub will include several mid-rise buildings clustered around a 17-story tower, as well as 150K SF of on-site amenities, including ground-floor retail space.

In 2020, Creative Science Properties changed its name to IQHQ and formed a REIT. Headquartered in Solano Beach, the company was started by Alan Gold, who founded BioMed Realty Trust and sold it to Blackstone for $8B.

Since then, IQHQ has raised nearly $3B and developed more than 5.5M SF of life sciences space that it owns and operates. In addition to the waterfront hub in San Diego, which is scheduled to be completed next year, IQHO is preparing to build the Fenway Center in Boston.

Opposite Fenway Park, the 1M SF development will include a 22-story high-rise and a 12-story tower, both of which will allow tenants to peer into the ballpark during Red Sox games without buying a ticket. Fenway Center is scheduled to be completed in 2025.