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Pension funds

NPS commits $500 mn to Blackstone life science property fund

Mar 17, 2021 (Gmt+09:00)

NPS commits 0 mn to Blackstone life science property fund
The National Pension Service has committed $500 million to Blackstone's new life science real estate fund that is expected to raise over $12 billion, according to investment banking sources on Mar. 16.

The NPS' commitment to Blackstone's Life Science Office Real Estate Perpetual Fund marks the South Korean pension fund's first investment in a vehicle targeting life science properties. 

The Blackstone fund has raised $8.4 billion so far. It focuses on core-plus life science properties, including medical laboratories and healthcare-related facilities in North America. Core-plus real estate stands somewhere between core assets that are fully leased and value-add properties that can be developed for additional capital gains.

The Life Science Office Real Estate Perpetual Fund had already purchased a 2.3 million-square-foot research lab and office portfolio from Brookfield for $3.4 billion late last year.

In an interview with The Korea Economic Daily last October, Blackstone Chief Executive and co-founder Stephen Schwarzman said the world's largest real estate investment firm was switching into warehouses and life science properties, after shedding most of its hotel portfolio over the past few years.
NPS commits 0 mn to Blackstone life science property fund
Life science facilities stand to benefit from the bio industry's growth accelerated by the spread of the global pandemic, along with the aging population.

Further, life science R&D centers are attractive in that they are less vulnerable to the remote-working trend than office and commercial buildings.

"They are increasingly attractive assets because of their low risk of vacancy, which determines the value of office real estate. They draw a steady stream of floating population, preventing a slump in the business district," said one of the sources. 

For the real estate portfolio, NPS focused on A-grade office buildings last year, while diversifying into logistics centers in North America and redevelopment projects in New York. Last month, the $740 billion pension scheme initiated its investment in a timberland fund.

Separately, Blackstone launched its first life science sector-focused fund, Blackstone Life Sciences V, in July 2020. The $4.6 billion vehicle targets established life science companies, late-stage product financings, and growth investments in emerging companies.

(Amended on Mar. 18 to clarify the Blackstone fund has raised $8.4 billion so far and is expected to garner over $12 billion at its final close.) 

Write to Jung-hwan Hwang at jung@hankyung.com

Yeonhee Kim edited this article.

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