Healthpeak Writes Down South San Francisco Property Value

Another South San Francisco biotech developer is feeling the burn of the slumping life sciences market.

Healthpeak Properties wrote down the value of the Point Grand complex in South San Francisco by $169 million, the San Francisco Business Times reported.

The Denver-based company built the 11-building, 630,000-square-foot campus in 1989 and has hosted some of the Bay Area’s best-known biotech companies over the years like heart drug developer Cytokinetics, cancer drug maker Exelixis and gene therapy company Allogene.

Healthpeak’s write-down comes as biotech companies struggle to raise money amid federal funding cuts to research and other health-related endeavors. As a result, many companies have had to cut jobs and shave down their office and lab space to free up cash.

That has prompted some Bay Area biotech real estate developers to consider converting buildings for tech and other office tenants, delaying approved building projects or reducing land banks for planned developments.

This summer, for example, life sciences real estate developer IQHQ sought to delay construction of its $1.3 billion, 857,000-square-foot project in South San Francisco by a decade. Harvest Properties also pressed pause on a planned research and development campus in Emeryville amid the shaky market.

In 2022, Healthpeak sold a 30 percent stake in seven buildings at Point Grand spanning 400,000 square feet to an unidentified sovereign wealth fund, generating $126 million at closing. The Point Grand complex is 60 percent leased, with most of the buildings at the site having undergone redevelopment.

Healthpeak kicked off the Bay Area’s biotech building boom a decade ago with the first phase of the 800,000-square-foot Cove at Oyster Point campus in South San Francisco. The Bay Area later became one of the country’s biotech hotspots as venture capital and investor money poured in. Still, lab leasing nationwide has taken a hit, and the region hasn’t been immune to the falloff.

— Chris Malone Méndez