HCP Sells Silicon Valley Property to Google for $1 Billion

Last month, HCP (NYSE: HCP) announced during its third quarter 2018 earnings call that the company had a $1 billion deal in place to sell its Brittania Shoreline Technology Park in Mountain View, California. The buyer of the property has been revealed to be Google (NYSE: GOOG, GOOGL), according to Silicon Valley Business Journal.

The Shoreline disposition is a linchpin in the Irvine, California-based health care real estate investment trust’s (REIT) turnaround efforts and a contributing factor in Standard & Poor’s decision to upgrade HCP’s corporate credit rating to BBB+.

HCP, a major owner of senior housing real estate, has been reconfiguring its overall portfolio as part of a larger turnaround effort. It spun off its large and troubled portfolio of skilled nursing facilities operated by HCR ManorCare in 2016, and since then has been trying to diversify its mix of tenants and types of assets, targeting medical office, life science and senior housing.

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Google moved to Shoreline in a 2016 land-swap agreement with Sunnyvale, California-based LinkedIn (NYSE: LNKD), and occupies 92% of the 52-acre, 12-building, 795,663 square-foot office and life sciences campus. The only other tenant on the campus is Alexza Pharmaceuticals, the San Jose Mercury News reports. Google and its parent company Alphabet have now been involved in the top two commercial real estate purchases in the U.S. this year. Alphabet purchased Chelsea Market in Manhattan for $2.4 billion last March.

Google has been rapidly accumulating Silicon Valley properties since December 2016. It has $3 billion acquiring properties in Mountain View, Sunnyvale, and San Jose.

In terms of its senior housing holdingsHCP has significantly reduced its exposure to real estate assets operated by Brentwood, Tennessee-based Brookdale Senior Living (NYSE: BKD) and recently completed a $264 million sale of 17 Brookdale assets to Apollo Global Management. Two more Brookdale assets are expected to be sold by the end of the year, at a price of $113 million.

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HCP realized a $700 million gain from the Shoreline sale, according to SEC regulatory filings. The property’s assessed value earlier this year was $367.3 million.

Written by Chuck Sudo

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