Singapore-listed CapitaLand Ascendas REIT plans to convert one of its California office buildings into a life science property after fully leasing the asset to a US pharmaceutical company.

The trust formerly known as Ascendas REIT will equip the San Diego building with new mechanical, electrical and plumbing systems and state-of-the-art labs, offices and vivarium spaces at an estimated cost of $40 million, CLAR’s manager said Friday in a release. The property will feature solar panels for energy efficiency and spa-like amenities for employees.

The two-storey, 94,230 square foot (8,754 square metre) building at 6055 Lusk Boulevard will serve as the global headquarters of Crinetics Pharmaceuticals, a NASDAQ-listed maker of drugs for rare endocrine diseases and related tumours.

“We are delighted to announce this partnership with Crinetics Pharmaceuticals,” said William Tay, executive director and CEO of the trust’s manager, which is wholly owned by SGX-listed CapitaLand Investment. “This initiative will have long-term benefits for both our companies.”

Future Yield Boost

The redevelopment property sits within the CareFusion campus in northwestern San Diego’s Sorrento Valley, a local hub for tech and life science firms, with Crinetics’ existing offices located just a two-minute drive away at 10222 Barnes Canyon Road.

The conversion to a life science space with LEED Gold certification will enable CLAR to charge a higher base rent with an annual escalation of 3 percent, while boosting net property income yield to 9 percent upon completion of the upgrade in the fourth quarter of 2023.

“This venture will solidify and enlarge CapitaLand Ascendas REIT’s track record in the life sciences space and foster even more opportunities for us,” Tay said.

CLAR took ownership of the building in 2019 as part of a $937.6 million portfolio of 28 US business park assets acquired from wholly owned entities of CapitaLand. The deal with Crinetics includes a triple-net lease commitment of 11.5 years, with an option to extend two additional five-year terms.

Choosing Life

The asset conversion is estimated to increase the proportion of CLAR’s life science properties to S$1.3 billion, or about 8 percent of assets under management. The REIT’s life science portfolio currently consists of seven Singapore properties, including the seven-storey, 497,012 square foot Nucleos biomedical research facility at the One North tech park.

At the end of June, CLAR’s S$16.6 billion ($11.6 billion) portfolio included 228 properties in Singapore, the US, Australia and Europe. Since then, the trust has announced its intention to acquire a food storage and distribution centre in western Singapore from PGIM Real Estate for S$191.9 million ($136.5 million).

Listed in November 2002, Ascendas REIT was rechristened CapitaLand Ascendas REIT last week. Also renamed were Ascott Residence Trust, which became CapitaLand Ascott Trust, and Ascendas India Trust, rebranded as CapitaLand India Trust.