NewAlexandria reit lures biotech investors with lab space
California-based trust a favourite target for fund managers thanks to its large collection of high-end laboratory space
The booming biotech sector is putting a premium on laboratory space, and fund managers are buying in.
One of their favourite targets is Pasadena, California-based Alexandria Real Estate Equities, which owns the largest collection of high-end lab space in such research clusters as San Diego, San Francisco and Cambridge, Massachusetts.
A total of 64 mutual funds and hedge funds have reported adding shares of the company to their portfolios in the current quarter, a 56 per cent jump from the September quarter, according to Morningstar data.
Those buys come on the heels of a steep decline in biotech stocks generally because of concerns that legislation could bring caps to drug prices.
Shares of Alexandria fell by as much as 10 per cent during the sell-off, while the broader Nasdaq biotechnology index tumbled as much as 24 per cent before hitting a low at the end of September. Fund managers say that they pounced on shares of a company they see as uniquely positioned to benefit from an ageing US population that will spur the development of new drugs. US-based life science firms have added about 80,000 employees since 2011, according to real estate research firm JLL.
That has helped push rents for lab spaces up by 7.4 per cent over the last year in Boston, the nation's most expensive market for life science firms, while San Francisco rose 16.9 per cent and San Diego is up 15.5 per cent.