Norway’s US$1.2 trillion sovereign wealth fund manager Norges Bank (NBIM) and the US$185 billion Canadian Public Sector Pension Investment Board (PSP) have kicked off their GBP1.5 billion UK life science real estate partnership with an acquisition in the university city of Cambridge.
They have jointly acquired ownership of the Capital Park Cambridge, which hosts a dozen companies from sectors including fintech, agtech and biotech, through to patent law and the NHS. The joint venture is expected to formally complete in November and will target the so-called Golden Triangle innovation cluster encompassing Cambridge, Oxford and London.
The UK economy is enduring a rocky patch – including political instability, high inflation and the weak pound sterling - which is set to undermine the value of real estate, but the British life sciences sector continues to thrive. Cambridge and Oxford universities alongside scientific campuses, teaching hospitals and research institutes in London, have helped underpin the continuing growth in capital flowing into the niche.
Stéphane Jalbert, PSP Investments’ Head of Asia-Pacific and Europe, Real Estate Investments, said, “This venture will allow us to invest at scale in the fast-evolving life science sector, helping creating ecosystems where corporates, universities, and start-ups are forming clusters that enable knowledge sharing and innovation.”
PSP Investments is following a trend of Canadian public pension funds forging tie-ups with institutional investors in the life science real estate sector across the world, which has seen particular focus on the San Francisco Bay Area, San Diego, Paris and London.
In February, CDPQ’s real estate arm, Ivanhoé Cambridge, joined forces with Lendlease to launch a joint venture for the development of labs, offices and manufacturing facilities for life science hubs in the US. The platform started with an initial US$500 million investment in new developments, targeting Boston, the San Francisco Bay Area and San Diego markets, as well as the New York-New Jersey metropolitan region, Philadelphia, Chicago, Los Angeles and Orange County. In September, the partners announced the start of construction on a major life science development at 60 Guest Street in Boston called FORUM, a nine-story, 350,000-square-foot life science building.
Last year, Canada Pension Plan Investment Board (CPP Investments) and Greystar Real Estate Partners teamed up to invest an initial US$1.2 billion in US life science real estate development opportunities. The Canadian PPF has a 90% stake in the platform with Greystar the remaining 10%.
Meanwhile, OMERS’s Oxford Properties has originated its own deals in life science real estate investments, as well as signing partnerships, and is arguably the Canadian pension fund sector's biggest investor in life science real estate. Oxford made 14 life science investments globally in 2021. When factoring in development opportunities at these investments, plus its existing pipeline of development and conversion projects, Oxford secured approximately US$3.8 billion of life science opportunities last year. The pace of its investment continued this year. In May, Oxford Properties and Novaxia, a leading French urban investor and developer, entered into a EUR1 billion long-term strategic partnership to invest in and develop life science real estate in France. The first phase of the Partnership’s investment activity is in Paris, which attracts 80% of all biotech venture capital funding in France.
In London, Oxford Properties and Reef Group were selected in April by the Guy’s & St Thomas’ Foundation hospital group to develop the Snowsfields Quarter site in central London with a total investment of GBP350 million. Oxford and Reef are creating world-class lab facilities across three new buildings in a prime health innovation cluster, next to the Guy’s campus which also hosts world-class medical and research institutions including King’s College London.
Meanwhile, in North America Oxford Properties entered into a partnership with Ensemble/Mosaic to own and develop life science properties at the Navy Yard in Philadelphia, including its Oxford’s investment in five existing life science assets owned by Ensemble Real Estate Investments, and Ensemble/Mosaic’s first two planned life science properties. In addition, Oxford will look to partner in all future life science projects on sites controlled by Ensemble/Mosaic at the Navy Yard.
It also entered the San Diego life science market in February with the US$464 million acquisition of 13-building portfolio of income producing properties. The deal followed a US$276 million acquisition of four life science assets in San Francisco in January, with anticipated follow on investments of US$500 million in the assets. It acquired Public Market Emeryville in a partnership with City Center Realty Partners, a San Francisco-based real estate developer and investor.
