Pension and Annuity Assets Can Lead to Biotech Growth and City Regeneration

What You Need to Know

Life sciences firms need patient investors.
Pension funds and annuity holders are patient investors.
Nurturing life sciences industries can also be great for urban commercial real estate.

“Biotech research facilities” might not be the first phrase the average saver or retirement fund manager associates with the word “pension.” But patient capital invested in such assets can (and does) play a big role in meeting the long-term liabilities of pension payouts, and the growth trajectory of the U.S. life sciences industry, taken alongside the need for companies in this space to avail themselves of an appropriate real estate footprint, becomes a key player in this virtuous cycle.

In creating that real estate footprint, it’s a big country and there’s much room to expand out of the usual geographic suspects, Boston, New York and San Francisco, into other cities that are ripe for urban reinvestment and regeneration and looking for new industries to attract, often after their industrial centers have shifted elsewhere.

We’re seeing this right now, for example, in cities like Syracuse, New York, where four Micron semiconductor fabrication plants are going up, or outside of Columbus, Ohio, where Intel is investing some $20 billion in two microchip fabs.

These geographies and countless others like them had previously been relegated to secondary and tertiary places, underinvested, yet with the potential for high quality of life and place-based amenities, as well as the existing “bones” of historic buildings for adaptive reuse.

Where Asset Managers Fit In

We expect to see much growth in science and technology, and the mission of companies like ours is to make this possible.

This past year, Legal & General Capital formed a partnership with U.S.-based real estate developer and biotech specialist Ancora to create a real estate platform dedicated to driving science and technology growth in partnership with anchor institutions in cities across the United States. Our biotech real estate investments will be underpinned by long-term retail annuities, or life insurance and pension premiums we acquire through our pension risk transfer business and other holdings.

Over the course of the last decade, we’ve used this business model in 11 cities in the United Kingdom, through a partnership with Bruntwood SciTech, a similar biotech realty specialist.

Through an initial seed capital investment of $500 million, Ancora L&G will be capitalized to deliver $4 billion of existing biotech real asset pipeline in the United States.

Smaller Markets Can Play

Rather than adding more commoditized product in overbuilt locations — take Boston, which has absorbed 1 million square feet of biotech property and has 6 million more in the pipeline — our end key locations are places like Fort Wayne, Atlanta, Providence and New Haven.

These smaller cities, as affordable alternatives to the big three, all have the advantage of adjacency to a major university, academic health center, or research institution, which fuels long-term growth, innovation, and community-building.

Currently Ancora L&G is delivering the first phase of a project in Fort Wayne, Indiana, called Electric Works, a mixed-use urban reinvestment project on the site of a 1 million-square-foot former General Electric industrial campus. It’s the first project of its kind in the Midwest.

Electric Works is a leveling-up regeneration initiative that will bring more prosperity — in the form of jobs, housing, and tech space and infrastructure — to the entire region.