IQHQ Lands $245M for Boston Life Science Campus
This funding enabled the developer to pay off an existing bridge loan.
Innovative Industrial Properties Inc. has entered into definitive agreements to provide $245 million to affiliates of IQHQ Inc. for the completion, lease-up, tenant improvements and stabilization of Phase I of Alewife Park, a master-planned life science campus in Cambridge, Mass.
The mezzanine loan is secured by pledges of equity interests in the entities that own Alewife Park, a 27-acre campus composed of three existing buildings totaling 392,000 square feet and two pad-ready sites with up to 364,000 square feet of additional development potential.
At closing, IIP funded approximately $111 million, which was used to repay in full the borrower’s existing $85 million bridge loan, together with accrued interest, fees and expenses.
READ ALSO: Life Science Sector Faces Vacancy Glut After Construction Boom
The remaining $134 million is expected to be funded through the fourth quarter of 2027, as additional amounts are drawn and funding conditions are satisfied. The loan is expected to yield an interest rate of about 15.8 percent over the term of the loan, subject to a floor of 14 percent.
According to IQHQ, the campus had about $800 million invested prior to IIP’s investment, and Phase I is currently 78 percent leased to Lila Sciences.
Neither IIP nor IQHQ replied to Commercial Property Executive’s requests for additional information.
The loan matures in February 2028 and has a one-year extension option. IIP also has an option to purchase all or a portion of the other mezzanine lender’s notes, increasing its investment by up to $155 million on the same terms.
IIP is best known as a provider of real estate capital for the regulated cannabis industry. The overwhelming majority of its lending portfolio, across 19 states, consists of industrial facilities typically used for cultivation, processing and manufacturing.
A potential tipping point for Boston life science
With more than 20 million square feet of space listed as available, the Greater Boston life science sector decisively favors tenants, according to a July report from Colliers. The report called the situation “the largest collection of empty space in the country,” with the major culprit being a surge of empty speculative buildings onto the market.
Still, there are small signs of life, Colliers added. Nearly 90 percent of the 2.8 million square feet still under construction is either built-to-suit or preleased, and positive net absorption, for the first time in two years, pulled vacancies down by 30 basis points in the second quarter.
In June, cancer therapy firm AdvanCell leased the 128,000-square-foot 1 Corporate Drive building at Innovation Park, IQHQ’s life science and advanced manufacturing campus in Andover, Mass. The deal brought the newly constructed Phase 2 of Innovation Park to fully leased. The Innovation Park campus includes 340,000 square feet of life science space, with amenities including a café, a fitness center with locker rooms and communal conference space.
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