Alexandria Settles Lawsuit Over Scrubbed Tennis Club

Alexandria Real Estate Equities has cut a $7.5 million deal with a recreation group in San Francisco that sued the developer for trying to sell its unbuilt biotech project in SoMa after breaking a pledge to build a world-class tennis club.

The Pasadena-based life science developer will cut a check to the San Franciscans for Sports and Recreation, which settled its lawsuit over the sale of the unbuilt mixed-use project at 88 Bluxome Street, the San Francisco Business Times reported.

Alexandria agreed to a one-time $7.5 million payout to the nonprofit group, according to its attorney, Anthony Giles. In return, the group agreed to back away from the development.

“San Franciscans for Sports and Recreation no longer has any claim in regard to that property,” Giles told the newspaper.

The recreation advocates had sued to enforce a 2016 agreement that required the publicly traded real estate investment trust to get its permission before selling the project site. The lawsuit was triggered by news last spring that Alexandria was shopping its 88 Bluxome development.

The group led by Seth Socolow had already compelled the biotech developer to add a world-class tennis club that would replace the demolished Bay Club once used by the likes of Andre Agassi, Serena Williams and Arthur Ashe.

Then it successfully challenged Alexandria’s decision last year to drop the negotiated, 134,000-square-foot replacement tennis club from its 1.2 million-square-foot, mixed-use project.

The tennis club scrub was made after Alexandra’s lead tenant, Pinterest, canceled its 490,000-square-foot lease signed in 2019 before the pandemic and the era of remote work, in exchange for a $90 million penalty. Alexandria pointed to the loss of the project’s anchor tenant and economic uncertainty as the justification for bailing on the promised tennis courts.

When Alexandria listed the project for sale last year, San Franciscans for Sports and Recreation sued to block it from changing hands.

In its 2016 agreement, the group had agreed to a one-time termination fee of $7.5 million, to be used to expand public sports and recreation spaces throughout San Francisco, should market conditions change and the club no longer be feasible to build.

This sum matches the payout from Alexandria in the recent legal settlement.

Alexandria offered to pay the sum in 2021, but the nonprofit tennis club advocate rejected the payment and continued its fight for the construction of the promised tennis courts.

In light of the settlement, the developer is now free to sell the entitled development site or revise plans for its life science project.

— Dana Bartholomew