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Life Sciences: Graymark acquires L.A.-area building for conversion

Firm paid $17.75M for the 98,776 s.f. property in Thousand Oaks, Calif.; CBRE was the broker

By Murray W. Wolf

THOUSAND OAKS, Calif. – San Francisco-based Graymark Capital has acquired a two-story, 98,776 square foot office building at 120 Via Merida in the Westlake Village area of Thousand Oaks for $17.75 million.

The vacant, value-add office building, which was built in 1998, sold for about $180 per square foot (PSF). The average sale price for office space in Westlake Village is about $457 PSF, according to LoopNet data.

Graymark Capital confirmed the acquisition in a Linkedin post yesterday (March 16). The post stated that its Gray Matter life sciences unit, in partnership with Argosy Real Estate Partners, had acquired the office campus for a life sciences conversion. Argosy is a Wayne, Pa.-based real estate investment firm with about $2.5 billion of assets under management (AUM).

The 120 Via Merida sale was announced Monday (March 13) by the local CBRE Capital Markets team with Dallas-based CBRE Group Inc. (NYSE: CBRE). CBRE arranged the sale, along with $42 million in financing “for the acquisition and speculative conversion of a life sciences campus.” The sale closed Feb. 23, according to RevistaLab data.

CBRE described the seller as a Los Angeles-based private equity (PE) firm; according to RevistaLab data, the seller was Westlake Portfolio LLC. BREI has determined that the LLC is affiliated with Younan Properties Inc., a commercial real estate investment and management company based in the Los Angeles area.

Mike Longo, Sean Sullivan and Todd Tydlaska of CBRE represented the seller in the transaction, and Greg Grant of CBRE arranged the financing on behalf of Graymark. According to CBRE, the 60 percent loan-to-cost (LTC), interest-only loan was placed with a life insurance company on a non-recourse basis. RevistaLab data indicates that the lender was Met Life Inc. (NYSE: MET). Most of the loan proceeds will be used for the conversion, according to CBRE.

CBRE says that Gray Matter has engaged New York-based architect BAM Creative to develop a phased life sciences conversion plan for the property.

The 6.7-acre 120 Via Merida property front the Ventura Freeway (U.S. Highway 101) in the Westlake Oaks office park in the Westlake Village area of Thousand Oaks. Thousand Oaks is the second-largest city in Ventura County, in the northwestern part of Greater Los Angeles. It is about 15 miles from the Los Angeles city limits and 40 miles from downtown.

“Thousand Oaks is the heartbeat of life sciences in Los Angeles,” Mr. Longo, a senior VP with CBRE, said in the March 13 news release. “The property sits at the entrance to the market and offers an ideal lab conversion due to its high-quality construction and campus layout, in a market with almost zero available space.”

“Life sciences assets continue to experience increased demand in Los Angeles, and Graymark’s conversion of this building follows the trend of investors finding creative ways to acquire and repurpose office properties for higher-demand uses,” Greg Grant, a senior VP with CBRE, added in the news release. “When complete, this state-of-the-art facility will benefit from its location in one of the strongest biotech hubs in California.”

According to CBRE, 120 Via Merida’s existing infrastructure is “well-suited” to be redeveloped for life sciences use, featuring 50,000 square foot plates, steel frame construction, outdoor balconies, grade-high dock door and an “ample” power supply.

Upon completion, CBRE says, the property will comprise 60 percent “lab-ready” space with upgraded mechanical, electrical and plumbing, and 40 percent newly built “creative office” space to support the lab. Plans also call for the property to undergo exterior and site improvements to the power system, loading area, indoor/outdoor amenity areas, cosmetics, roof and parking lot.

With its Ventura Freeway frontage, CBRE says, the property also offers prospective tenants “high visibility, access to a highly educated labor pool, executive neighborhoods and ample retail amenities,” including The Four Seasons, Equinox and The Shoppes at Westlake Village. The area is home to more than 30 life sciences companies, including the global headquarters of biopharmaceutical giant Amgen Inc. (Nasdaq: AMGN), which is about seven miles to the northwest.

Los Angeles has emerged as one of the top life sciences clusters in the United States, CBRE says, with 28 companies actively seeking space at the end of the fourth quarter (Q4) of 2022. The market recorded 950,000 square feet of demand for lab and research and development (R&D) space, with 681,170 square feet under construction as of Q4, according to the firm.

Not the first ‘conversion’ plan

The 120 Via Merida building was previously the corporate headquarters for Wellpoint Health Networks Inc., a managed care company that served members through Blue Cross of California and other health plan companies. Wellpoint was acquired in 2004 and gradually merged into what is now Anthem Holding Corp., an Indianapolis-based insurance firm.

CBRE marketing materials prepared in 2019 originally pitched the Westlake Oaks campus as a two-building, 211,898 square foot, “value-add investment opportunity” on three parcels totaling 20.2 acres. The offering also included an adjacent 113,122 square foot property at 4553 La Tienda Road, which was 100 percent triple-net leased to Blue Cross of California through Dec. 31, 2026.

According to a February 2020 news release from Younan Properties, it acquired the then 53 percent leased, two-building Westlake Oaks campus for an undisclosed price; local news media reports indicated that Younan paid $40 million for the campus. The seller was represented by the same CBRE team of Messrs. Longo, Sullivan and Tydlaska that represented Younan Properties in the recent sale of 120 Via Merida.

Younan Properties, which was founded in 2002 by its president and CEO, Zaya S. Younan, and which specializes in “Class A” office properties, initially planned to lease up the vacant office space on the Westlake Oaks campus. However, the COVID-19 pandemic emerged just weeks after Younan acquired the property, pushing the Thousand Oaks area office vacancy rate to nearly 25 percent by 2021.

At that time, the vacant 120 Via Merida building was earmarked by Younan Properties for a different kind of conversion: to a self-storage facility. But, in January 2022, the Thousand Oaks City Council enacted a temporary moratorium on self-storage development in “prime commercial areas.” That moratorium became permanent in October 2022, presumably contributing to Younan’s decision to sell.

BREI could not confirm before press time if the companion property at 4553 La Tienda Road, also now vacant, has also been sold or is currently on the market.

News Release: CBRE Arranges $17.75 Million Sale of Office Property in Thousand Oaks for Life Sciences Conversion

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