Alecta invests $ 780 million in US healthcare and life science real estate

3 December 2020

During the past twelve months, Alecta, the Swedish pension provider with approximately $ 110 billion AUM, has made three large investments in US healthcare and life science real estate. The investments total $ 780 million and are part of Alecta’s objective of increasing investments within real assets to 20 percent of total AUM within a 5-year period.

– Alecta continues to see many interesting opportunities in the US real estate markets across several property types. These investments are made with a long-term perspective and offer us scalability. We believe they will contribute to further increase the returns to Alecta’s customers and contribute to portfolio diversification, says Axel Brändström, CIO Real Assets at Alecta

– We are following a strategy where we increase our exposure towards sectors less sensitive to the general development of the economy and more driven by fundamental changes in society. The aging population in the US is a factor and theme that we believe will create increased demand for certain types of real estate for many years ahead. Finding strong partners is essential in making this kind of investment successful and to deliver attractive risk-adjusted returns, says Frans Heijbel, Head of International Real Assets at Alecta.

The investments have been made in three different structures, two of them together with Kayne Anderson and one with Blackstone, with a strong focus on the US market.

Kayne Anderson, Joint Venture Agreement, (PMAK MOB JV LLC )

At the end of 2019 Alecta committed $ 230 million to a joint venture agreement with Kayne Anderson / Remedy Medical Properties (formerly known as MBRE Healthcare) and Physicians Realty Trust. The investment was made in a Medical Office Building real estate portfolio, consisting of 271 000 sqm in 19 American states. Kayne Anderson will manage the joint venture together with Remedy Medical Properties.

Kayne Anderson, Additional co-invest, (KACORE JV LLC)

June 2020, Alecta committed $ 250 million to an additional co-invest (in KACORE JV LLC) together with Kayne Anderson / Remedy Medical Properties. This additional investment was made in a Medical Office / Senior Housing real estate portfolio, consisting of 140 000 sqm of Medical Office and 2032 units of the Senior Housing in 17 American states.

Blackstone, BioMed Realty, Open-ended fund

On November 6, 2020 Alecta committed to a $ 300 million investment in the Blackstone / BioMed Realty fund. BioMed is the largest unlisted life science real estate company in the world and is held through an open-ended fund structure. BioMed’s real estate portfolio consists of 1.05 million sqm in Boston / Cambridge, San Francisco, San Diego, Seattle and Cambridge, UK. They are a global partner to many of the largest companies in life science.

– These investments will be managed by well-reputed firms with long and successful track-records managing this type of real estate. They are also living up to Alecta’s high ESG standards in line with our belief that long-term value is created through responsible and sustainable investments, says Frans Heijbel, Head of International Real Assets at Alecta.

Alecta has approximately $ 110 billion under management (as of end of Q3 2020). Alecta has since 2016 successively increased its share of alternative assets within its portfolio, mainly real estate, but also infrastructure and alternative credits. Since 2016, the total share of alternative assets has increased from 7 to 12 percent, with the objective to reach 20 percent of the total assets within a 5-year period.

Source: Alecta
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