A joint venture between Boston Properties and the Canada Pension Plan Investment Board has closed on the acquisition of the Santa Monica Business Park in the Ocean Park neighborhood of Santa Monica, California. The duo paid $627.5m, including $11.5m of seller-funded leasing costs after the effective date of the purchase and sale agreement. The 47-acre office park includes 21 buildings totaling approximately 1.2 million of leasable sq ft. Currently 90 percent of the property is leased; 70 percent of the leasable space is subject to a ground lease with 80 years remaining. The ground lease provides the joint venture with the right to purchase the land underlying the properties in 2028 with subsequent purchase rights every 15 years.
As part of the joint venture, CPPIB will invest $147.4m for a 45-percent stake in the Business Park. Boston Properties will provide customary operating, property management and leasing services and will invest $180.1m in the joint venture. The deal was completed with a $300m loan.
“The Santa Monica market has demonstrated strong growth in demand and rental rates from a variety of world-class tenants and industries. With the acquisitions of Santa Monica Business Park and Colorado Center in 2016, Boston Properties along with its joint venture partners now owns 2.3 million sq ft and controls 24 percent of the Santa Monica class A office market, creating a strong platform for us to continue to grow in the West LA markets,” said Owen Thomas, CEO of Boston Properties.
