Global investment management firm BlackRock bought a blood-processing facility and a pharmaceutical lab in Australia as the first seed assets for its $1.5 billion Life Sciences investment platform, Financial Review reported.
The world’s largest asset manager partnered with Australian fund manager Wentworth Capital to make the purchase after the two firms determined that the life sciences real estate sector — including laboratories and research hubs — is a new asset class attractive to global investors and likely to be profitable.
Ben Hickey, head of Australian real estate for BlackRock, said the company thought that the sector is poised for long-term growth “driven by increased government and infrastructure spend[ing]” along with existing industry capabilities.
BlackRock launched the strategy after it surveyed European investors who invest in alternative asset strategies in September and found that a third of them were investing in life sciences real estate, the Financial Review reported.
Life sciences real estate, which refers to facilities built for medicine and healthcare, includes spaces for biotech, pharma and medical device companies. Examples include Merck’s recent expansion of its human papillomavirus or HPV vaccine production facility in Virginia, and Moderna’s new Innovation and Technology Centre for vaccine manufacture and mRNA research being constructed at an “unprecedented speed” near Oxford, England, in partnership with the U.K. government.
Hickey said Australia offered a high-growth low-risk market for the investment strategy and it was likely to see growth trends similar to what is happening in the European Union and the U.S., where rising industry demand is leading to the expansion of the life science and biomedical innovation hubs, according to the financial standard.
JLL, a different asset management company, forecasts in its 2024 report that worldwide pharma sales will be 80% higher by 2030 compared with 2023, driven largely by a doubling of revenue from “biologics.” Those include vaccines, gene therapies and monoclonal antibodies made from living cells that are altered through biotechnological methods. JLL predicts that growth will drive a recovery in the life sciences real estate market, which faltered in recent years.
However, as the number of biotech startups explodes, they are scrambling for new space, the report said, and demand for smaller life sciences spaces is already on the rise and should drive expansion of the market as a whole.
Anticipating this growth, BlackRock purchased two facilities owned by different investment funds previously managed by Charter Hall, an Australian property development and funds manager company, according to Financial Review.
The first is one of only four blood-processing facilities in Australia, operated by the Australian Red Cross Society under the name Lifeblood. BlackRock didn’t reveal what it paid for the 12,700-square-meter 24-hour facility in Alexandria, but Charter Hall paid $159 million for it in 2021.
The second is an 8,113-square-meter laboratory and office building in Macquarie Park currently rented by Israeli multinational Teva Pharmaceuticals, which is the world’s largest manufacturer of generic medicines. Charter Hall paid $53 million for the building in 2021.
BlackRock said it expects its new investments in life sciences to yield returns in line with its assets such as childcare facilities, which typically have a 4.5-5.5% rate of return.
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Move into pharma-related real estate increases BlackRock’s stake in public health
BlackRock is the world’s largest asset manager, with a record $11.5 trillion in assets as of October. The firm is so big and has such close ties to the U.S. government, that Bloomberg has called it the “fourth branch of government.”
It holds large stakes in most of the companies that provide the food, housing, information, data and drugs that people across the world use daily, The Defender reported.
That includes companies such as Google, YouTube, Facebook, Twitter, Amazon, Alibaba, Bayre, AstraZeneca, PepsiCo, Coca-Cola, Microsoft, Apple, Netflix, Reuters, FedEx, American Airlines, Ford and many others.
The company also “played a pivotal role in the largest institutional theft of American wealth in the history of the country,” beginning with the financial crash of 2008, according to investigative journalist Whitney Webb.
That theft is still ongoing, in part because most people don’t know enough about how BlackRock works, namely its relationship with the Federal Reserve, Webb said.
BlackRock’s move into pharmaceutical-related real estate could shore up yet another aspect of the pharmaceutical industry that the asset manager controls.
The firm is among the top three — alongside Vanguard and State Street — shareholders of COVID-19 vaccine makers Pfizer, Moderna and Johnson & Johnson — which means they benefited from these companies’ soaring profits and the resulting rise in their stock prices. It’s also one of Merck’s largest shareholders.
BlackRock also owned stakes in technology companies developing vaccine passports and digital wallets, and in many of the large private employers that mandated COVID-19 vaccines for their employees, The Defender reported.
And in 2020, BlackRock received a no-bid contract from the U.S. Treasury Department to manage a $454 billion fund, under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), for businesses adversely impacted by the COVID-19 lockdowns early that year.
