CPPIB enters US life sciences sector with $1.2bn JV with Greystar

The long-standing partners’ latest partnership targets a sector that has quickly become a high-conviction investment choice for investors.

Canada Pension Plan Investment Board is expanding its global life sciences investment exposure by launching an investment partnership in the US with Charleston-headquartered manager Greystar Real Estate Partners.

CPP Investments and Greystar allocated an initial $1.2 billion in equity to develop life science offices and lab buildings across major US life sciences markets. To that effect, the platform made its debut investment with the acquisition of an office and laboratory development project, an 18-story building spread over 468,000 square feet in Massachusetts.

According to a statement announcing the partnership, CPP Investments will own a 90 percent stake in the project, with Greystar owning the remaining interest. “The US life sciences sector continues to grow and evolve, with increasing demand for purpose-built lab and office space that is designed to market leading technical specifications,” said Peter Ballon, managing director, global head of real estate at CPP Investments. “The acquisition of 74M expands our global life sciences strategy into the US market and provides a solid foundation to this new program with Greystar, a top-tier partner with a proven development track record.”

Bob Faith, founder, chairman and CEO of Greystar, added: “The investment management and development platform Greystar has built in the US is unmatched, and the opportunities in life sciences offer another sector where we can build an in-house team of experts and help match the supply with the demand.”

The demand for life sciences real estate – R&D space, diagnostic centers and other facilities – has been growing rapidly in recent years, especially after the pandemic, as a result of ageing demographics and technological advancement in healthcare. According to a report published by the property services firm Cushman and Wakefield, $70 billion in aggregate public and private capital was invested into life sciences-related companies in North America last year, up 93 percent from the previous record of $36 billion in 2018. The firm expects 2021 will see this investment grow further to approximately $90 billion.

Greystar and CPP Investments have partnered on several other ventures previously, the most recent being a US multifamily development-focused JV this January, to which CPP allocated $350 million in equity for a 90 percent stake and Greystar committed $39 million for the remaining 10 percent.

Earlier this week, CPP Investments also announced a joint venture with Australian real estate developer and investment firm Lendlease to invest in the development of the Milano Innovation District, an over 10 million-square-foot project in Italy that will house life sciences and technology-focused firms. CPPIB and Lendlease jointly invested about €400 million in the 50:50 venture.