Dutch pension fund PGGM, which manages around $288 billion for its members, has entered into an agreement with Australia-listed real estate group Lendlease to create the Lendlease Innovation Limited Partnership, according to a press release on June 20.
“We believe that the increased focus on health, combined with substantial investments in technology, will give a boost to the innovation and life science sectors in Asia Pacific,” Jikke de Wit, private real estate senior investment manager at PGGM, told AsianInvestor.
PGGM will hold an 85% interest, with the remaining 15% going to Lendlease, in the $721 million (S$1 billion) partnership which will invest in real estate assets in the life sciences and innovation spaces, with a focus on Australia, Japan, and Singapore.
“The life sciences sector and specifically the demand for such specific real estate products, have grown significantly in recent years and continue to benefit from structural growth drivers,” said de Wit.
“Besides, we believe that this sector will provide further diversification into our current real estate portfolio.”
Lendlease said it will be providing services to the partnership based on the assets' needs, including investment management and development management, in the announcement.
"Technological advances and higher R&D spend, driven by an ageing population, signal growing demand for real estate hubs and development centers that are focused on research, innovation, and advancing next-gen technology,” Justin Gabbani, Lendlease’s Asia chief executive, told AsianInvestor in an email.
According to the release, the partnership has already secured its first asset in Yokohama, Japan. The 12-storey freehold property, listed for commercial use, is located close to clusters of high-tech, knowledge-intensive research and development (R&D) and innovation operations in Yokohama's Minato Mirai district.
The district is also home to R&D operation offices of major Japanese brands such as Sony, Shiseido, and Hyundai.
This investment marks PGGM’s first deal in the Apac region that purely focuses on the innovation and life sciences sectors, said de Wit.
“We prefer to build a portfolio by first starting with the developed economies which have higher R&D investment spend in the innovation and life sciences sectors,” she said.
The Dutch pension fund manager has already identified various pipeline deals in the target markets of Australia, Japan, and Singapore, according to de Wit.
“These projects are in various stages of due diligence,” she said. “Unfortunately, there is not much more we can share at this moment.”