Blackstone Acquires Lab Buildings for $3.46 Billion
Blackstone’s Life Science Portfolio Grows
Blackstone Group (BX) has ramped up its presence in the life sciences real estate market with the acquisition of a $3.45 billion portfolio of biotechnology lab buildings. Even before the COVID-19 pandemic began, Blackstone was one of the world’s top investors in life science buildings. Now the company, and others, are even more focused on the industry.
In the fall Blackstone recapitalized BioMed Realty, the biggest private holder of life sciences real estate in the US, for $14.6 billion. Blackstone is also in the process of purchasing two more life sciences buildings in the Boston area for $1 billion, according to people familiar with the matter.
Weighing the Risks of Investing in Life Sciences Real Estate
While the pandemic has battered demand for commercial real estate, office space, and other sectors of the real estate industry, demand for lab space has soared. Many office buildings have sat vacant while employees work from home during the pandemic. Meanwhile, most lab workers need to come in to work each day because their jobs require specific equipment, as well as specialized ventilation and other safety measures.
Still, some analysts suspect that prices for life science real estate may be nearing their peak. It is also possible that new buildings being constructed will saturate the market. Blackstone’s strategy is to invest heavily in markets like Cambridge where it is challenging to build new spaces and where there is a lot of demand for biotech space.
In addition to its life sciences real estate holdings, Blackstone has also invested in biotech companies themselves. In July the firm raised $5 billion in a private fund for life sciences investments. In August, Blackstone invested $275 million in CryoPort (CYRX), a company that specializes in temperature-controlled logistics.
Blackstone Eyes Other Growth Trends
Blackstone has $341 billion in assets under management and is among the world’s largest real estate investors. While the company has been investing heavily in life science properties, it is also looking at other trends in real estate demand.
Blackstone sees a bright future for industrial properties that can be used as distribution centers since demand for ecommerce is climbing and shows no signs of slowing down. Blackstone is also investing in studio spaces and offices for video production, as streaming services like Netflix (NFLX) and Disney+ (DIS) rush to fill demand for new content.
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