Blackstone to Buy $3.4B Life Science Portfolio

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Blackstone Property Partners Life Sciences will soon increase its holdings by 2.3 million square feet in one fell swoop. BPPLS has struck a deal to acquire a collection of lab office buildings, 90 percent of which are located in leading global life science hub Cambridge, Mass., from a Brookfield Asset Management real estate fund, in a transaction valued at approximately $3.4 billion.

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News of the agreement comes roughly two months after Bloomberg reported that Toronto-based Brookfield was considering selling its life science portfolio with hopes of pocketing $3 billion. Brookfield came into possession of its 2.3 million-square-foot portfolio of life science assets in December 2018 with the closing of its $11.4 billion acquisition of Forest City Realty Trust Inc. Today, the group of properties is home to a long list of blue-chip tenants.

It’s a good time to expand in the life science real estate sector. “A transformation is underway with the pandemic both accelerating and disrupting certain trends. In sectors such as legacy retail and media, secular declines have intensified. Meanwhile, businesses connected to the digital economy and the life sciences revolution have benefited,” Jon Gray, chief operating officer of Blackstone, said during the global investment firm’s third quarter 2020 earnings call on October 28. “Resilient, income-producing assets such as logistics, garden apartments and life science office properties are re-rating higher in value in the current interest rate environment.”

Cambridge conquest

If all goes as planned with the transaction, Blackstone will hold the distinction of being the largest owner of life science office real estate in Cambridge, with a prominent footprint across from the Massachusetts Institute of Technology. The Brookfield portfolio purchase will also bolster the recently recapitalized BioMed Realty, Blackstone’s life science real estate portfolio company, which operates under the ownership of BPPLS. Upon completion of the transaction, BioMed Realty will have an enterprise value of roughly $20 billion, and two-thirds of its platform will be clustered in the thriving Boston/Cambridge market. “Boston-Cambridge remains the nation’s premier life sciences market, owing to its leading research universities attracting the largest amount of NIH funding, the largest inventory of cutting-edge laboratory space and the seemingly insatiable demand by companies to participate in the local ecosystem,” according to a recent report by CBRE.

Blackstone is relying on Deutsche Bank Securities Inc., Morgan Stanley & Co. LLC and Wells Fargo Securities LLC to serve as its financial advisors on the transaction, while Brookfield has turned to Eastdil Secured and Citigroup Global Markets Inc. for financial advisory services. The sale is on track to close in the first quarter of 2021.