The $2.9 billion acquisition of a major property investor’s landholdings — most of which are in South City’s biotech sector — should bring a change to the city’s bottom line.
But the required re-evaluation of the property is not expected to bring a windfall to South San Francisco despite the land deal’s humongous price tag, officials said.
Health Care Property Investors Inc. announced Monday the nearly $3 billion purchase of Slough Estates USA Inc., whose clients in South San Francisco include biotech heavyweights Genentech and Amgen.
The acquisition includes 83 existing properties of roughly 5.2 million square feet and roughly 3.8 million square feet of space in the pipeline for development. Slough Estates has numerous land holdings in the Oyster Point area, including the Britannia Oyster Point and Britannia East Grand developments; 42 percent of its U.S. property is in South San Francisco.
In South San Francisco, Slough currently has 2.4 million square feet of mostly research and development space either under construction or under review for future building, according to information provided by the city’s Planning Department.
With Health Care Property Investors taking over Slough’s extensive land holdings, the property will be reassessed. When property changes ownership, San Mateo County reassesses the property’s value, which in turn affects the property taxes the owner pays.
Assistant City Manager Marty Van Duyn said the reassessment would not likely bring in a significant dollar amount to the city because most of the buildings were recently built and are not outdated.
“I don’t expect a windfall,” Van Duyn said. “I’m not so sure that it’s going to bethat significant.”
Management of the properties is likely to stay in place, so South San Francisco did not expect too much to change as far as how aggressive Health Care Property investors would be in the future, Van Duyn said.
That lack of impact extends to the entire life science and biotechnology real estate market in the area, said Gregg Domanico, a managing partner with NAI BT Commercial, a commercial real estate firm. The demand for biotech property will continue to be “very strong,” he said.
“It’s just a big price tag,” Domanico said. “It’s all good product … it’s a good deal.”
Jay Flaherty, the chairman and CEO of Health Care Property Investors, said in the announcement that the two sides had been discussing a deal since 2003.