These 5 Deals Helped UK Life Sciences Real Estate To A Record Year
Life sciences real estate in the UK is a smaller market than its U.S. big brother, but it is growing faster, and that growth is set to continue after a record 2021.
That is the summation of JLL, which said that investment in the sector in 2021 was £2.4B, up 61% from £1.5B the previous year. That compares to the U.S., where investment rose 17% to £9.1B.
The reason JLL thinks there is more growth to come? Investors with capital to spend want to put £20B to work in UK life sciences real estate, a figure up 25% from 2020.
The structural underpinning to this investment is growing venture capital investment in life sciences companies, which is driving growth and the need for more space — space that is in short supply. There is no purpose-built lab space being delivered in the UK this year, JLL said. Venture capital investment in the UK rose 111% to £2.8B, Pitchbook said.
Here are the five largest deals in the sector in the UK last year.
The Arlington Portfolio
Business parks, once an out-of-favour asset class, are attracting new tenants and reinventing themselves as life sciences campuses. So it was that Brookfield spent £714M on a portfolio of four parks being sold by TPG. Only 30% of the income came from life science tenants at the time of purchase, a figure Brookfield is looking to increase at the schemes, which include two parks in west London, one in Oxford and one in Gloucester.
The Oxford Science Park
In October, Singaporean sovereign wealth fund GIC agreed a deal to buy a 40% stake in the extension of the Oxford Science Park, a campus of life sciences properties owned by Magdalen College, one of Oxford University’s colleges. The extension will see at least 500K SF of new space developed on 23 acres of land. The value of the extension is £390M.
Life Sciences REIT Buying Spree
In November a new listed company, Life Sciences REIT, raised £350M in an initial public offering, the biggest UK REIT IPO since 2016. It quickly got busy spending the money, including paying £178M on a portfolio that included the £77M Rolling Stock Yard building, a 50K SF asset near King’s Cross in London.
214-240 Cambridge Science Park
Brockton Capital came out on top to buy a portfolio of five buildings on Cambridge Science Park for £99M, but the bidding on the deal highlights JLL’s point about the weight of capital targeting the sector. The initial guide price for the buildings was £68M, but 20 global bidders pushed the price up.
Peterhouse Technology Park
British Land is one of the myriad companies looking to diversify into the life sciences sector, and it made its maiden purchase at Peterhouse Technology Park in Cambridge last August. It paid £75M, a 4.15% yield, for four buildings totalling 140K SF and leased to chip designer Arm at £26 per SF — a rental level that has potential to increase, BL said.
