Legal & General is getting into the U.S. life science property game. By putting up $500 million and allying with Ancora, the U.K. insurer is aiming to spark a five-year, $4 billion property blitz outside of the biotech hot spots.
With 1.4 trillion pounds sterling ($1.8 trillion) under management, L&G is one of the world’s largest asset managers and a player in the U.K. lab space scene. Bruntwood SciTech, a joint venture between Bruntwood and L&G, has a portfolio that spans 11 U.K. locations, including AstraZeneca’s old site at Alderley Park now valued at 600 million pounds. Yet, the insurer has lacked exposure to the U.S. life science property market.
L&G is now filling that gap in its portfolio. Legal & General Capital, the alternative investment arm of the insurer, has formed a 50:50 joint venture with U.S.-based real estate developer Ancora. The deal sees L&G provide $500 million in seed capital to a new company, Ancora L&G.
The company, operating under the name Ancora, will target “emerging regional markets in the U.S. where early mover advantages are available.” The joint venture brings together L&G’s cash and Ancora’s experience of buying and developing sites near to anchor institutions such as universities and academic medical centers.
Ancora is based in Durham, North Carolina, and has team members working out of Baltimore, Boston, Chicago, Indianapolis, New York and Washington. The real estate developer’s prior projects have created lab space in cities such as Baltimore and Durham. L&G sees Ancora’s experience and connections as a way to unlock the U.S. market and address the need for infrastructure.
“The lab real estate market in particular is one of the smallest sectors among other commercial U.S. asset classes. This lack of scale creates high barriers to entry for investors and has made it particularly challenging for tenants to grow due to scarcity of supply. LGC’s ability to access this opportunity via Ancora will set it apart from other sources of institutional capital seeking to participate in the market,” L&G CEO Nigel Wilson said in a statement.
L&G will capitalize Ancora to deliver $4 billion of pipeline and planned acquisition and development activity over the next five years. Beyond that, the insurer plans to seek third party co-investment partners to further scale the portfolio.