SNH Closes Major Mortgage Refi in Boston

By Gail Kalinoski

Vertex Pharmaceuticals headquarters, Boston

Boston—More than two years after Senior Housing Properties Trust purchased two 15-story Class A life science buildings in Boston’s Seaport District for $1.1 billion, the REIT has refinanced the Fan Pier property and closed on a new $620 million mortgage.

The 10-year loan has a fixed interest rate of 3.53 percent and will mature in August 2026. SNH, based in Newton, Mass., said it expects to use the proceeds of the new mortgage to repay a portion of the outstanding loan. Following the repayment, the REIT said it will have about $900 million available under its unsecured revolving credit facility.

“We are pleased to take advantage of the current low interest rate environment to term out the majority of the outstanding balance on our unsecured revolving credit facility and to extend the average maturity of our debt to 8.9 years,” David Hegarty, SNH president & COO, said in a prepared statement. “We believe that this transaction also highlights the value and quality of our medical office and life-science portfolio.”

The loan financing was provided by Morgan Stanley and Citi. Eastdil Secured acted as SNH’s advisor and Skadden, Arps, Slate, Meagher & Flom LLP provided legal counsel to SNH.

The REIT, which owns senior living communities, nursing homes, medical office buildings and wellness centers throughout the United States, acquired the two buildings with a total of 1.65 million square feet of lab space, offices, parking and street-level retail in May 2014. The buildings are 96 percent leased by Vertex Pharmaceuticals for its corporate headquarters for 15 years. At the time of the purchase, it was one of the city’s biggest commercial real estate deals that year. SNH bought the property from The Fallon Co. and an institutional investor.

Fallon, one of Boston’s leading real estate investment and development companies, had completed the development in December 2013. A few months later, in February, Vertex, a global biopharmaceutical company, held a ribbon-cutting ceremony at the site to celebrate its new corporate headquarters. The company moved about 1,300 employees from several locations in Cambridge, Mass., to the two Seaport District buildings that are connected by a walkway on the sixth floor. The LEED-certified buildings have 75 small informal collaboration areas, a 500-seat cafeteria and 3,000 square feet of classroom and lab space that several Boston public schools use.