Courtesy of Bruce T. Martin Photography
Alexandria Real Estate Equities has dropped a planned 510,000-square-foot life science conversion in Newton, and recorded a $139 million impairment charge on the property.
In January 2020, the nation’s leading lab developer acquired the three-building Riverside Center office park at 275 Grove St. for $235 million and announced plans for a lab conversion.
In a quarterly earnings statement released Monday, Alexandria revealed that it took a $139 million impairment charge on the property.
“Since our acquisition, the macroeconomic environment and demand for office space have deteriorated considerably,” the Pasadena, California-based REIT stated.
Alexandria said it expects to sell the property, its own office-only campus in Greater Boston, in mid-2023.
Alexandria previously cited rising construction costs in requesting an extension of its special permit for the lab conversion last November.
Newton-based Mark Development has put its own life science project at the Riverside Green Line station next door on temporary hold, asking the MBTA for an extension to their development agreement and seeking to lease a former hotel on the site to the state for use as a shelter.
In Monday’s quarterly statement, Alexandria also revealed that a recent recapitalization at 15 Necco St. in Boston’s Seaport District values the property at $367 million, or over $1,061 per square foot.
The 345,995-square-foot development is fully leased to the Lilly Institute for Genetic Medicine.
Alexandria sold an 18 percent interest in the property for $66.1 million to Mori America LLC, the U.S. subsidiary of Tokyo real estate developer Mori Trust Co.
The transaction was the largest single-building life science transaction in the U.S. in 2023, according to brokerage Newmark, which arranged the transaction.
In its first-quarter report, Alexandria revised its 2023 earnings per share outlook downward from a previous range of between $3.41 to $3.61 to $2.21 to $2.31.
Alexandria said it expects to complete $1.6 billion in dispositions and other sales during 2023.
During the first quarter, Alexandria reported earnings of $700.8 million, up from $615.1 million in the same quarter of 2022. Funds from operations rose from $20.5 to $2.19 per share over the same period.
