Harrison Street JV Lands Refi for Michigan MOB – What is a Ground Lease?
Finance, Medical Office, Midwest, News, Office, Berkadia, CIBC Bank, Harrison Street, Murphy Development Group LLC
Doug Meijer Medical Innovation Building. Image courtesy of CommercialEdge
Health Innovation Partners has received a non-recourse loan at 65 percent LTV for the 205,534-square-foot Doug Meijer Medical Innovation Building in Grand Rapids, Mich. Berkadia Medical and Life Sciences secured the financing for the sponsor, which is a joint venture between Harrison Street, Walsh Construction, Murphy Development Group and Rockford Construction.
According to CommercialEdge data, the property became subject to a $58.9 million construction loan provided by CIBC Bank USA in 2020. Initial investment in the $85 million facility also included a $19.5 million gift from Doug Meijer and the Meijer Foundation.
READ ALSO: How to Build Flexibility Into Life Science Projects
Michigan State University had proposed the development of the property back in 2018 as the second phase of its Grand Rapids Innovation Park, an innovation hub for biomedical research, bioengineering and health technology anchoring the city’s Medical Mile. Health Innovation Partners won the proposal in 2019 and broke ground the same year. The medical office and biomedical building came online in late 2021.
SmithGroup designed the Class A, seven-story building that includes a theranostics clinic with a cyclotron-equipped radiopharmacy and PET/MR scanner. BAMF Health, which anchors the property, provides advanced imaging technology and cancer treatments. In early 2023, Spartan Innovations and Health Innovation Partners opened The Bridge, an office incubator space for high-tech and high-growth startups, on the fourth floor of the facility.
The 2.7-acre property at 109 Michigan St. NW is adjacent to the MSU Grand Rapids Research Center in downtown Grand Rapids, having access to Interstate 196. Other health-care facilities in the surrounding area include Corewell Health Hospital and Trinity Health Grand Rapids, among others.
Investment in the life science sector
A new report from Savills Research and Data Services shows the pandemic created a conjuncture in which the life science sector thrived, resulting in significant investment through venture capital funding.
Despite a slow down in 2022 compared to the previous year, which saw $81.2 billion in investment across the U.S., the interest in this asset class remained high, with well-known metros still on the receiving end of the most VC life science funding such as the Bay Area, Boston and other emerging markets like Chicago, Seattle and Raleigh-Durham, N.C.
A significant deal took place just last month when Alexandria Real Estate Equities Inc. and National Development recapitalized a 345,995-square-foot life science project in Boston, in what was considered the largest single-building transaction of its kind in the U.S. at that time. The development is slated for delivery later this year.
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Berkadia Medical and Life Science secured the loan for the $85 million facility.
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In the simplest form, a ground lease is a long-term net lease (usually 49 years or 99 years) of land including any improvements on the said land. Assets that can be subject to a ground lease include but are not limited to, vacant land, office buildings, and large residential buildings.
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