Source,The Philadelphia Inquirer, Jacob Adelman
Developer J. Brian O’Neill, founder of the substance-abuse chain Recovery Centers of America, has paid $103.3 million to a partner to become the primary owner of a sprawling former pharmaceutical complex in Upper Merion once owned by GlaxoSmithKline.
The deal, along with the planned purchase of The Philadelphia Inquirer’s printing plant in the area and the 2017 acquisition of offices from Liberty Property Trust, would give him control over 2.3 million square feet of real estate to pursue a long-held plan for a network of lab and office buildings occupied by a life-science tenants in eastern Montgomery County.
O’Neill bought the roughly 1 million square feet of former GSK offices and labs on 128 acres in October 2020 from affiliates of hedge fund Beach Point Capital Management, his partner in owning the property since the fall of 2018, records show.
The amount he paid the hedge fund was set three years ago in a buyout agreement struck when O’Neill teamed up with Beach Point to purchase the property from drug giant GlaxoSmithKline for $54 million, O’Neill said in an interview Monday.
The acquisition last year by O’Neill’s MLP Ventures LLC was partially financed with a loan from another Beach Point unit, O’Neill said. The hedge fund is based in Santa Monica, Calif.
MLP is continuing to plan for a cell- and gene-therapy manufacturing lab that would be partly located at the former drug complex, once part of GSK’s King of Prussia campus, O’Neill said.
Other parts of the proposed facility — being marketed as the Center for Breakthrough Medicines — would be built in sections of the office park acquired three years ago from defunct developer Liberty Property Trust and at the Inquirer plant, O’Neill said.
MLP and its partner on the proposed facility, private equity firm Deerfield Capital Management, have said the 680,000 square feet of cell-production lab space would cost $1.1 billion to develop. Deerfield, focused on health care, is also an investor in Recovery Centers of America.
MLP began promoting its plans for the site in mid-2019, about nine months after the Beach Point-led group bought it. Its plan called for a campus for life-science tenants called Discovery Labs.
Late last year, Gov. Tom Wolf’s administration approved a $1 million grant to build a parking garage there. The money would come from the Redevelopment Assistance Capital Program, a state fund for projects that might have a potentially outsized impact on economic development.
Currently, the only tenants are GSK itself, which remained at the site as a lessee, and Wuxi Biologics, a Shanghai-area-based biotechnology company. Together, the two occupy 120,000 square feet of the 972,000-square-foot complex.
Tenants of the office buildings acquired from Liberty include Children’s Hospital of Philadelphia, which manages its home-care program there; Thomas Jefferson University, which leases space there for its specialty pharmacy and home-infusion programs; and Hewlett Packard Enterprise Development, which houses some corporate staff in one building.
A spokesperson for The Inquirer declined to comment on the newspaper’s deal with MLP for the printing plant. The media company announced plans to sell the property at 800 River Rd. in October. MLP’s acquisition of the GSK site last year was first reported by the Philadelphia Business Journal.
Records show that the $103.3 million deal was financed with two mortgages totaling $127.6 million.
The senior debt is recorded as being held by the U.S. affiliate Luxembourg-based financial company Alter Domus, a provider of services such as accounting and debt-servicing to banks and other investment groups. The actual source of that $65.9 million loan was Beach Point, O’Neill said in the interview.
Beach Point did not immediately respond to a message asking why it was not identified in the documents as the lender.
Another mortgage, for $61.7 million, was provided by an affiliate of Deerfield, records show. That loan is a second-lien mortgage, so if MLP were to default on its debt, Deerfield would be second in line to claim a share of the property, or cash from its sale.