ESR acquired the two-building campus from mainland developer Yango
ESR has acquired a business park in the Shanghai biotech cluster known as Zhangjiang Pharma Valley, marking the industrial specialist’s first-ever life sciences asset.
Hong Kong-listed ESR bought the two-building campus from mainland developer Yango for an undisclosed price earlier this month in partnership with Elixir, a biotech real estate firm founded by former JLL executive Jim Yip.
ACGT Park has a gross floor area of 8,940 square metres (96,229 square feet) and comprises two lab buildings of four to five storeys separated by a large open garden, Yip told Mingtiandi on Thursday. The facilities are leased to eight biotech tenants, including Shanghai-based firms Antengene and GenFleet Therapeutics.
“Life sciences properties have recently become a hot investment asset class in China, with a slew of investors like Gaw Capital, Warburg Pincus, APG, CBC, Hillhouse and Sequoia having announced deals or raised new funds to target the sector,” said Yip, who served as JLL’s head of capital markets for China before starting up Elixir last year.
Milestone Acquisition
ESR confirmed to Mingtiandi that the ACGT Park acquisition is a “major milestone” for the company as it makes a strategic entry into life sciences real estate in a bid to capture rising demand in China’s biopharma industry.
Elixir founder Jim Yip
The campus at 103 Cailun Road in Zhangjiang High Tech Park in Shanghai’s Pudong district forms part of Zhangjiang Pharma Valley Phase II, a 1.5 square kilometre (0.6 square mile) biomedical hub with more than 300 companies and 30 R&D centres and regional headquarters. Pharmaceutical giants Novartis, Roche, Pfizer and AstraZeneca have set up development bases in the area.
Formerly called Zhangjiang Neo, ACGT Park is being rebranded with an eye towards upgrading the 2011-vintage buildings, Yip said.
Shenzhen-listed Yango Group said in a recent estimate that it expected to report a loss of between RMB 3.5 billion and RMB 4.5 billion for the first half of the year. In February the developer defaulted on $657 million in offshore bonds, then it followed up in March by failing to repay RMB 600 million (then $94.62 million) in principal and interest for a domestic bond in China.
Yango has yet to make a statement regarding the divestment of the property in Zhangjiang Hi-Tech Park, a popular industrial cluster in eastern Shanghai.
A longtime broker at JLL and Cushman & Wakefield, Yip describes Elixir as an investment and management platform focused on providing innovative lab and R&D space and cutting-edge services for biotech companies in China.
“ESR and Elixir have both expressed their strong commitment in this embryonic sector and will make further acquisitions,” he said.
Healthy Interest
JLL reported that 26 percent of office space leased in the Shanghai market in 2021 came from life sciences businesses — doubling the 13 percent figure achieved in 2020 — and institutional investors have taken note.
Dutch pension fund manager APG teamed up last year with Singaporean investment firm CBC Group to launch a $1.5 billion venture targeting the life sciences real estate segment in Asia Pacific. The cooperation includes setting up a platform to develop and manage new healthcare projects across the region, starting with 1 million square metres of facilities in Shanghai.
In April of this year, Chinese developer DNE Group announced a joint venture with a global institutional investor to pursue opportunities in life sciences parks located in top-tier cities in China, with an expected total investment of $1.2 billion. The seed project of the JV is a life sciences park owned and operated by DNE at Shanghai’s Zhangjiang Science City cluster.
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