BlackRock buys blood bank and pharmaceutical lab for new platform

“We believe the life sciences sector represents a growing opportunity to capitalise on the long-term sectoral tailwinds driven by increased government and infrastructure spend, as well as the existing capability of Australian universities, industry and innovation clusters,” said Ben Hickey, head of Australian real estate at BlackRock.

Mr Hickey said the new partnership aimed to invest in “fit-for-purpose laboratory assets”.

A September survey of European investors focused on alternative asset strategies by BlackRock found a third were pursuing opportunities in life sciences real estate.

When considering the Asia Pacific region, Mr Hickey said Australia was one of its most liquid and transparent markets while offering high-growth opportunities without the added risk.

He said the first two acquisitions were high-quality, strategic assets and – in the case of the blood bank facility – critical infrastructure.

The larger of the two acquisitions is a 12,700-square-metre purpose-built laboratory building at 17 O’Riordan Street, Alexandria, currently operated as Lifeblood 24-hour blood processing centre by the Australian Red Cross Society. It is one of just four facilities of its kind in Australia that supply blood to hospitals.

The second asset – located at 37 Epping Road, Macquarie Park – is an 8113-square-metre laboratory and office building leased to Israeli multinational Teva Pharmaceuticals, the world’s largest manufacturer of generic medicines.

Both properties were acquired from funds managed by Charter Hall.

BlackRock, which acquired the properties through funds managed by its real estate business, and Wentworth Capital declined to reveal the price paid for the two properties. Charter Hall paid $159 million for the Alexandria facility and $53 million for the Macquarie Park property in 2021.

Mr Hickey declined to specify return expectations for life sciences. In September, when disclosing plans to establish the $1.5 billion Life Sciences partnership, Hamish MacDonald, managing director and head of investments at BlackRock Asia Pacific, said these assets would generate returns in line with those achieved for assets like last mile logistics and childcare (typically between 4.5 and 5.5 per cent for prime grade buildings).

While neither of the seed assets are part of university campuses, both are close to universities, established innovation precincts, and core transport infrastructure.

Paul Apostoles, executive director of Wentworth Capital, said Australia had amazing universities that supported high-growth life sciences business, but had received little private sector investment.

“We see that as an opportunity,” Mr Apostoles said. Mr Hickey added that the JV partners would also benefit from “first mover advantage”.

Wentworth Capital is currently developing a $500 million life sciences hub at the University of Sydney that could potentially be acquired by the JV platform.

To manage these seed assets and others to be acquired by the Life Sciences partnership, BlackRock and Wentworth have set up a specialist operating platform called Area 53.

It will be helmed by scientists and will work with tenants on a day-to-day basis to enhance the offering provided and assist their businesses, explained Mr Apostoles.

It is not just big institutional funds that are targeting life sciences assets. Private investors are also seeking exposure to the sector, albeit at lower price points.