Although the life sciences industry is in the midst of a huge correction, one of the largest life sciences real estate development firms is seeking to buy low and bet big on a bounce back.
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Breakthrough Properties, a joint venture formed by Tishman Speyer and Bellco Capital in 2019, announced it has quickly raised $330M in direct commitments to its newly launched Breakthrough Properties Growth Portfolio II fund. An additional $100M was raised in co-investment capital in conjunction with the fund's launch.
The fund, launched earlier this month, seeks $1.5B in total, PERE reported.
While that figure would represent roughly half of what was raised by the first iteration of the Breakthrough Properties Growth Portfolio fund, it would also represent a large bet on a bruised life sciences CRE sector.
Breakthrough CEO Dan Belldegrun told PERE the new fund has been launched during an opportune time in the industry. The pipeline for pharmaceutical space construction has greatly narrowed at the same time that demand for space has increased due to onshoring pressures.
The previous fund invested largely in spec construction. This time, Breakthrough Properties will use more of the capital raised for buying up assets at a discount, according to the company.
“This closing aligns with the most compelling investment window we’ve seen in years,” Belldegrun said in a press release. “Transitory market dynamics have generated the opportunity to acquire high quality assets at heavily disrupted pricing and to capitalize on the sector’s long-term structural tailwinds.”
As of the second quarter, lab buildings developed between 2022 and 2024 remained around 48% vacant across the country, according to JLL. The firm found 4M SF of lab space nationwide has either gone through some type of distress or pivoted to another property type this year.
Participants in the first closing of the new fund include global asset managers, investment advisers, pension funds and family offices.
Breakthrough launched its first fund, Breakthrough Properties Growth Portfolio I, in 2022.
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