Lendlease already has experience building this B. Braun biomedical facility in Japan
Australian developer Lendlease has teamed up with Dutch pension fund and asset manager PGGM in a S$1 billion ($720 million) strategy that will invest in innovation and life science properties across Australia, Japan and Singapore, according to a joint announcement on Monday.
The new venture is seeded with a 12-storey commercial property in Yokohama city, south of Tokyo, providing 45,000 square metres (484,376 square feet) of built space near the Minato Mirai research and development hub that houses the R&D operations of major Japanese brands.
“Technological advances and higher R&D spend, driven by an ageing population, are signalling a growing demand for real estate hubs and development centres that are focused on research, innovation and advancing next-gen technology,” said Justin Gabbani, Lendlease’s chief executive officer for Asia. “The establishment of an innovation-focused investment partnership together with our long term partner PGGM is a vote of confidence in Lendlease’s position as a global real estate and investment leader.”
The partnership comes as life science companies are expected to “expand significantly” in the region between now and 2025, boosting demand for R&D hubs, medical facilities, laboratories, as well as related warehouses and offices, based on an industry survey by JLL released last month.
Yokohama Research Hub
PGGM, focusing on providing pension funds for the health and welfare sectors in the Netherlands, is taking a 85 percent interest in the venture while its Australian partner will hold a 15 percent stake.
Justin Gabbani, Lendlease’s chief executive officer for Asia
Lendlease will also serve as the investment, development, construction and property manager for the assets acquired by the JV, which aims to create “hubs of economic activity where innovation, entrepreneurship, creativity and placemaking intersect.”
Acquired for an undisclosed sum, the freehold Yokohama property is situated near Minato Mirai, a seaside urban hub in central Yokohama which is home to R&D operations of major companies including electronics giant Sony, cosmetics brand Shiseido, car maker Hyundai, as well as electronics maker Murata Manufacturing.
While company representatives from both firms declined to share more details on the strategy, Mingtiandi understands that there are future acquisitions in the pipeline with the entire funds targeted to be deployed “within the next few years.”
“There are various pipeline deals identified in the target markets. Projects are in various stages of due diligence,” PGGM spokesperson Maurice Wilbrink said. “Unfortunately there is not much more we can share at this moment.”
PGGM said this latest tie-up is backed by its largest client PFZW – a €277 billion ($292.5 billion) Dutch pension fund for the local healthcare sector with three million members.
“We believe that the increased focus on health combined with substantial investments in technology will give a boost to the innovation and life science sectors in Asia Pacific,” said PGGM Private Real Estate senior director Jikke de Wit and associate director Ping Ip in a joint statement. “Our partnership with Lendlease which has been developing over 25 years gives PGGM a chance to build a portfolio of assets in the hubs where innovation, talent and knowledge come together.”
Lendlease and PGGM have experience investing together in real assets, having established a £220 million infrastructure fund in 2010 which deployed capital in healthcare, education and residential public-private partnership assets over a span of five years.
Life Science in Focus
This latest tie-up follows a string of investments into APAC’s life science sector over the past year, including a HK$917 ($117 million) JV between Hong Kong’s Kailong Group and EC Healthcare formed earlier this month to develop a medical building in Kowloon.
Last November, another Dutch pension fund manager – APG Asset Management – moved to set up its own $1.5 billion life science property venture alongside partner Singapore healthcare investment firm CBC Group. That initiative aims to invest in facilities across mainland China starting with a focus on developing healthcare facilities in nine key cities including Beijing and Shanghai.
JLL’s survey of 150 real estate professionals working in life science-related firms shows that 82 percent expect the sector to continue to expand in Asia Pacific over the next five years as more businesses are drawn increasing demand for healthcare in the region and enabled by a growing cadre of industry professionals.
The majority of the survey respondents also believe that their companies will increase their footprints in APAC between now and 2025, particularly in the form of R&D laboratories, medical facilities and manufacturing hubs.
“The future success of the Asia Pacific life sciences sector is linked to the depth of the commercial real estate offering in the market,” said Tim Graham, head of capital strategies for Asia Pacific at JLL. “As competition for high-quality and specialised space intensifies, owners of and investors in life sciences real estate have the opportunity to play a role in incubating the next phase of the sector’s growth.”
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