UMass Medical School Buys 3 Biotech Buildings In $40M Deal

In a bit of a surprise move, the University of Massachusetts Medical School has purchased the remainder of the five biotech buildings in the Massachusetts Biotechnology Research Park on Plantation Street for $40.3 million.

The school has been leasing space in two of the three buildings, known as Biotech Three, Four and Five. It purchased the properties, which contain just over 300,000 square feet of space, on Friday, according to the Worcester County Registry of Deeds.

The school's subsidiary already owns Biotech One and Two.

The seller was California-based Alexandria Real Estate Equities, which purchased the buildings in 1999. The firm said this morning that it plans to reinvest the proceeds of the sales into higher-value, Class A assets in Cambridge.

Vacancy rates in the three buildings are likely to rise to 48 percent this year as the medical school and Quest Diagnostics – two major tenants – are relocating some operations out of the park, Alexandria said.

Quest is building a lab in Marlborough after closing on its purchase of UMass Memorial Health Care Inc.'s diagnostics business. And the medical school is in the midst of filling up its newly built $400-million Albert Sherman Center, including some from the newly acquired buildings, Mark Shelton, a spokesman for the medical school, said in an email this morning.

Shelton said the school has leased parts of Biotech Four and Five and that there are other tenants in the buildings that will stay there.

"UMMS does plan that the biotech park will continue to be a sought-after location for life sciences research and development, and UMMS will be working with current and prospective tenants to do so," Shelton wrote.

While UMass is growing, the purchase has city officials concerned that the city's commercial tax base is shrinking.

The three buildings are assessed at $49.7 million, which means they had been generating about $1.5 million a year in commercial property taxes.

Mayor Joseph Petty said this morning that a UMass official called him last week to tell him the sale would be closing Friday. It was the first he had heard that one of the largest tax-producing properties in the city was coming under nonprofit ownership.

"I understand this was confidential and the selling party required UMass to keep it confidential," Petty said. "It's a budgetary concern."

Petty said he has talked to City Manager Michael O'Brien, who told him he would meet with UMass to discuss the tax situation moving forward. Petty hopes that the city can work out an agreement for the school to continue paying the taxes, though it would not be required under state law.

It's possible that not all of the $1.5 million is off the table. Petty said if UMass leases some of the space to for-profit entities, a partial property tax formula would take effect.

UMass Medical Purchase Highlights Twists Of Non-Profit Ownership