Innovative Industrial Properties has committed $245 million in mezzanine financing for Alewife Park, a 27-acre life science campus in Cambridge, Massachusetts, expanding the real estate investment trust’s diversification into life science investments.
The financing is being provided to affiliates of IQHQ, a life science real estate company, and will support the completion, lease-up, tenant improvements and stabilization of the first phase of Alewife Park. The loan is secured by pledges of equity interests in the entities that own the campus.
Alewife Park includes three existing buildings totaling 392,000 square feet in Phase I and two pad-ready sites capable of supporting up to 364,000 additional square feet in Phase II. According to IQHQ, approximately $800 million had already been invested in the campus before IIP’s financing.
Phase I is currently 78% leased to Lila Sciences, a Cambridge-based company using artificial intelligence for scientific discovery. That leasing activity provides an existing tenant base as IQHQ works toward completion and stabilization of the first phase.
For IIP, the transaction represents a significant capital deployment into life science real estate as the company expands beyond its traditional focus on specialized properties leased to regulated cannabis operators. The REIT has increasingly identified financial investments in the life science sector as another component of its investment strategy.
“This transaction reflects our disciplined approach to capital allocation by providing financing in support of a premier Class A life science campus in Cambridge that has demonstrated strong leasing momentum,” IIP Executive Chairman Alan Gold said.
IIP funded approximately $111 million at closing. The initial proceeds were used to repay the borrower’s existing $85 million bridge loan in full, along with accrued interest, fees and expenses.
The remaining $134 million is expected to be funded through the fourth quarter of 2027 as the borrower draws additional amounts and satisfies applicable funding conditions. IIP expects to finance the investment with cash on hand and borrowings under its revolving credit facilities.
The mezzanine loan is expected to generate an interest rate of approximately 15.8% over its term, subject to a 14% floor. It matures in February 2028 and includes an option for a one-year extension, subject to conditions contained in the loan agreements.
IIP also negotiated the right to purchase some or all of another mezzanine lender’s notes on the same terms. Exercising that option could increase IIP’s investment in Alewife Park by as much as $155 million, potentially bringing its total exposure to the financing to $400 million.
The investment gives IIP exposure to a sizable existing campus in Cambridge, one of the country’s established centers for biotechnology and life science activity, while providing capital intended to move Phase I toward stabilization. The additional pad-ready sites also give the property up to 364,000 square feet of future development capacity, although the announced financing is focused on Phase I.
The structure allows IIP to participate through debt rather than acquiring the property directly. Its security consists of equity pledges in the entities that own Alewife Park, while the high-teens expected yield provides the company with a potentially significant earnings contribution if the financing performs as contemplated.
IQHQ, founded in 2019, acquires, develops, redevelops, leases and manages real estate serving the life science industry. Alewife Park represents a substantial development within that portfolio, with its existing buildings, significant prior capital investment and additional development sites providing a platform for continued growth.
For IIP, the $245 million commitment advances a broader shift in capital allocation. While the REIT remains focused on owning specialized real estate leased to state-licensed cannabis operators, Alewife Park increases its exposure to life science through a large financing investment tied to a Class A Cambridge campus.
The transaction combines a high-yielding loan structure with an asset that already has substantial capital invested and significant Phase I occupancy. IIP’s remaining funding commitments through 2027 will support the next stage of tenant improvements, leasing and stabilization as IQHQ advances the campus.