APG, CBC Joint Venture Buys Beijing Life Science Assets For Over $180M

A joint venture between Dutch pension fund manager APG Asset Management and Singapore healthcare-focused private equity firm CBC Group has acquired a pair of Beijing assets at a cost of over $180 million in the latest show of confidence in China’s life sciences real estate sector.

The JV, CBC Healthcare Infrastructure Platform (CBC HIP), bought an 80 percent stake in a sprawling life science campus in Beijing’s Daxing district, the firm announced Thursday. CBC HIP chief executive officer Hans Kang said his firm had purchased the 119,000 square metre (1.28 million square foot) Daxing Biomedicine Industry Park last month for nearly $180 million.

“The asset location is one of the top existing life science parks in Beijing so the market demand is very, very strong,” he said, adding that the campus was more focused on manufacturing than research.

In addition to the Daxing campus, CBC HIP earlier this month acquired a land parcel in Zhongguancun Life Science Park, a northern extension of the capital’s famous Zhonguanccun tech park in Changping district via a government land sale, where it plans to develop a 178,000 square metre life science industrial campus starting from the end of this month.

Nearing 100% Occupancy

The Daxing complex comprises eight manufacturing buildings, four research and development offices and auxiliary facilities, and is 90 percent occupied by 18 firms.

Its tenants include contract pharmaceuticals maker Pharmaron, alongside local in-vitro diagnostics specialist Hotgen Biotech Co, as well as Shenzhen-listed third-party medical diagnostic services provider Dian Diagnostics Group.

CBC HIP said the asset is collecting strong revenues from its existing occupiers, but the new owners still plan on undertaking renovations to upgrade the facilities, improve its facade and increase power capacity. Kang said the initial yield is close to 7 percent based on net property income and estimates this could hit around 7.5 percent once the property is stabilised.

The dedicated healthcare platform bought the stake in the Daxing campus on behalf of China Life Science Infrastructure Venture (CLSIV), a vehicle in which APG invested $400 million of the $500 million raised during its first closing last November for an 80 percent stake, with CBC contributing the remaining equity.

Kang said the seller is a local private company but declined to disclose its identity. The Beijing municipal government reportedly built the Daxing Biomedicine Industry Park in a bid to boost its modern manufacturing industry, with state-run conglomerate China Resources also having developed projects in the facility.

Next Big Thing

An hour drive to the north is Zhongguancun Life Science Park where Kang said CBC HIP purchased a dedicated life science campus from the government last month in the first such sale in the area over the past decade.

The APG-backed firm is planning to build a life science industrial campus on the site that will house manufacturing facilities, research and development hubs and office space by the fourth quarter of 2024. Kang said both of the CLSIV deals have now been closed.

CBC HIP also has additional 1 million square metres of projects in the pipeline targeting life science clusters across Beijing, Shanghai and Guangzhou, as well as in the city of Suzhou in Jiangsu province.

“We strongly believe [theChina life science sector] is going to be a big industry that has a very long runway for growth and we are providing real asset solutions to the life science companies so we will also benefit from this trend,” Kang said. “We are optimistic about the overall market in the medium to long term and we are excited about this – this can be the next big alternative real estate asset class.”

Fund Aims for $1.5B Closing in Q1

CBC HIP aims to build a “scalable and sustainable portfolio with attractive risk-adjusted returns for investors” in China, Japan, Korea and Singapore, Kang said.

Kang told Mingtiandi that the firm’s CLSIV vehicle is on track to reach its hard cap of $1.5 billion by the first quarter of 2023 amid strong reception from global investors, including sovereign and pension funds.

Kang said the strategy has an eight-year fund life and targets a 22 to 23 percent internal rate of return. “CBC has an edge – great access and network resources within this ecosystem of the life science industry – that’s one major reason why APG invested in us,” he added.