With Life Sciences In Demand, Brookfield Eyes $3B Portfolio Sale

Brookfield Asset Management is considering a sale of its life sciences property holdings, which might fetch as much as $3B, Bloomberg reports, citing anonymous sources familiar with a potential sale.

The Canadian investment giant acquired roughly 2.3M SF of life sciences space about two years ago when it bought Forest City Realty Trust for about $11.4B. Brookfield also acquired multifamily units, office and retail space in that deal.

During Brookfield's most recent conference call, no company executive talked about life sciences dispositions or much about dispositions at all. Rather, the company stressed its buying opportunities.

"As government aid tapers, the private sector will also be increasingly in need of capital, and there should be many opportunities across all of our pools of capital ... within our property, infrastructure, renewable and private equity flagship funds," Brookfield CEO Bruce Flatt said during the call.

Such a sale, if it occurs, would come when life sciences real estate is relatively strong. In mid-October, CBRE reported that employment in the life sciences sector, which supports demand for the space, was barely dented by the coronavirus pandemic.

Specifically, life sciences employment was down by 1.3% as of July from its peak in March, according to CBRE. But employment in the sector is also 1% higher than a year ago, as opposed to the overall decline of 7.6% in total U.S. employment year-over-year. Employment in biotech R&D has been particularly strong, the company reports, up by 4.9% from a year ago.

Investors are also interested in the industry, with venture capital funding for the 12 months ending Q2 2020 at a record $17.8B. One demand driver for the industry is the federal government's emphasis on life sciences R&D to combat the pandemic.

Earlier this month, in a major life sciences property deal, Blackstone Real Estate Partners VIII and a number of co-investors agreed to sell BioMed Realty for $14.6B to a new, permanent fund managed by Blackstone, yet to be named.

BioMed owns about 11.3M SF of life sciences office buildings in the United States and the United Kingdom, including concentrations in leading life sciences markets, such as Boston, San Francisco, San Diego and Seattle, and Cambridge in the U.K. The transaction values BioMed at $6.5B more than in 2016, when BREP VIII purchased the company.