The search for a cure for Covid-19 is lining the pockets of some landlords.
While the pandemic wreaks financial havoc on hotels and retailers, landlords who cater to biotech and pharmaceutical tenants are seeing increased demand as companies research treatments for the coronavirus, according to the Wall Street Journal. The work of those tenants, too, is more difficult to replicate in a work-from-home setup than the typical office employee.
Alexandria Real Estate Equities, one of the largest life-sciences-focused real estate investment trusts in the country, raised $1.1 billion last week through a share offering. In the past, the REIT had discounted prices by 3 percent to 8 percent, but this time its shares were priced at a discount of just 2.6 percent.
Founder Joel Marcus told the Journal it was “the largest equity offering in the company’s history” and “massively oversubscribed.”
Other major life-science landlords are in expansion mode, acquiring existing properties and planning new developments. It’s a departure from other commercial developers who are seeing demand fall for office space and retail space.
Blackstone Group-owned BioMed Realty is planning 2.5 million square feet of new development across the country, adding to a portfolio of 11 million square feet of space. Brookfield Asset Management paid $251 million for a 50 percent stake in a 700-acre life-sciences campus near the University of Oxford in the U.K.
Though developers and landlords are eager to break into the sector, there are still some challenges and hidden costs, such as installing medical-grade ventilation systems.
Jason Kaufman, a senior vice president at Silverstein Properties, said that the industry is an “institutional focus du jour.”
“Everyone who operates a loft-style building in New York City thinks they have a life-sciences building,” he said. [WSJ] — Dennis Lynch