Novo Nordisk’s 770,000-square-foot headquarters complex on Scudders Mill Road, above, which at one point had been a white elephant in the Route 1 commercial office landscape, has been sold to a South Korean company for $305 million — about $396 per square foot. The sale of the offices, organized by Cushman Wakefield, was the largest real estate transaction of the year in the state.

Novo Nordisk is currently leasing 563,000 square feet on the 58-acre property, which it renovated in 2013, with rights to renew through 2031.

In a June 12, 2013, cover story in U.S. 1, the original structure, built in 1985 for Merrill Lynch, was described as “functionally obsolete, with old heating and air conditioning systems and a wasteful 50-foot wide aisle down the center.” To accommodate Novo Nordisk the building was “stripped down to its structural steel, with approximately 93 percent of materials in the core and shell and 77 percent in the interior recycled in the process, and it was redesigned to encourage employees to work together.”

Novo officials said in 2013 that it made sense to refurbish an existing building rather than start from scratch. “Developers were able to take advantage of an infrastructure that would have to have been created in a green field site,” said a Novo Nordisk spokesperson. “Utilities, a hard surface parking lot, roads, sewage, electric, and gas already existed.” The total investment required to redevelop the building was $225 million.

The developer was a joint-venture partnership between Ivy Equities, LCOR Inc., Intercontinental Real Estate Corp., and CalSTRS. The purchaser was the South Korean investment firm, Hana Asset Management.

“The superior investment-grade tenant and durable in-place cash flow with contractual rent steps at 800 Scudders Mill enabled us to source this noteworthy partnership as the purchasing entity,” said Andrew J. Merin, vice chairman with Cushman & Wakefield’s metropolitan area capital markets group.

The buyer financed the acquisition along with future funding tied to the planned expansion of the tenant. John Alascio, Alexander Hernandez, and Alex Lapidus with Cushman & Wakefield’s equity, debt, and structured finance team arranged the loan package on behalf of Hana.

“This was indeed a complex transaction involving a foreign entity trying to understand structural considerations for financing in the U.S.,” noted Alascio. “Future funding components are always complex in terms of logistics and obtaining lender approval. It can often be easier with single-tenant financing, which this is, but in this instance, given the nature of future funding and the earn-out of space to the tenant, it was particularly challenging.”

Andrew Merin, David Bernhaut, Gary Gabriel and Brian Whitmer with Cushman & Wakefield of New Jersey, Inc. represented the seller. The buyer, an investment manager headquartered in the Republic of South Korea, handled the sale in-house.

Novo Nordisk Inc. (NVO), 800 Scudders Mill Road, Princeton 08540. 609-987-5800. Jerzy Gruhn, president.

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