Ventas, GIC to Secure $475M for Office Portfolio

Ventas Inc. and GIC are in the process of securing a $475 million non-recourse refinancing loan for an 811,025-square-foot office portfolio, according to a KBRA rating report. The portfolio consists of the Drexel Health Science Building and The Assembly, both under Ventas’ ownership, located in Philadelphia and Pittsburgh, respectively, Yardi Research Data shows.

Wells Fargo Bank and JP Morgan Chase are expected to issue the fixed-rate note, which bears an interest rate of 5.75 percent and is scheduled to mature in 2029. The deal is slated to close on Oct. 2. Out of the total amount, the Drexel Building will be subjected to $247 million, while the rest of $228 million will go to The Assembly.

As of September, the two-property office portfolio was 100 percent leased to four tenants, CBRE reports. The roster includes Drexel University and University of Pittsburgh, which constitute the largest tenants at each of the two properties, according to the same source.

The beginning of August saw publicly traded U.S. equity REITs in the Dow Jones equity all REIT index register a negative 0.59 percent in total returns. While S&P Dow Jones office real estate indexes recorded one-year total returns of -11.28 percent, Ventas Inc. stood out with the highest one-year return of 33.34 percent.

The portfolio, up close

The 455,079-square-foot Drexel Health Science Building came online in 2022 at 60 N 36th St., within 2 miles west of downtown Philadelphia. The 12-story LEED Gold-certified property encloses office and laboratory spaces.

Originally completed in 1915 as an industrial building, The Assembly became an office property in 2022 through a conversion process, Yardi Research Data shows. Totaling 355,946 square feet across three stories, The Assembly encloses laboratory, R&D and office spaces and has two attached life science buildings and an adjacent parking garage. The property is at 5051 Centre Ave., some 3 miles northeast of downtown Pittsburgh.

July saw the national office vacancy stand still at 19.4 percent, unchanged from the previous two months, yet marking a 130-basis-point increase compared to the same time last year, the latest Yardi Matrix national office report shows. During the same month, average rents contracted to $32.72 per square foot across the U.S., down 15 cents from June, but up 3.3 percent year-over-year.