Sweden’s biggest pension fund Alecta has revealed it invested $780m (€648m) in US healthcare-related real estate following its strategy of diversifying into less cyclical properties, and including opportunities linked to the pandemic.

The investments – made via three co-investments and joint ventures – are also part of the $110bn pension fund’s ongoing efforts to expand its allocation to real assets from around 12% currently to 20%.

Most recently, on 6 November, Alecta committed $300m to the Blackstone BioMed Life Science Real Estate fund.

BioMed is the largest unlisted life science real estate company in the world, Alecta said, held through an open-ended fund structure, with a 1.05m sqm portfolio in Boston and Cambridge, San Francisco, San Diego and Seattle in the US, as well as Cambridge in the UK.

Alecta also made two investments with Kayne Anderson, including a $230m joint venture agreement with Kayne Anderson/Remedy Medical Properties (formerly known as MBRE Healthcare) and Physicians Realty Trust at the end of 2019.

The investment was made in a medical office building real estate portfolio consisting of 271,000sqm in 19 US states, and the JV is managed by Kayne Anderson and Remedy Medical Properties, Alecta said.

In June 2020, Alecta committed $250m as an additional co-investment in the JV together with Kayne Anderson and Remedy Medical Properties in a medical office and senior housing real estate portfolio, consisting of 140,000sqm of medical office and 2,032 units of senior housing in 17 American states.

Frans Heijbel, head of international real assets at Alecta, told IPE Real Assets: “These three investments are interesting in the current market environment, and they benefit from long-term demographic themes.

“They are not dependent on broader economic development, and we believe that because of the US’ ageing population there will be a massive undersupply of a certain type of real estate.

“This demographic trend also translates to life-science assets, and it is a strategy that we believe will work equally well in a pandemic scenario and afterwards,” Heijbel said.

Of the three investments announced, only the latter two were made after the COVID-19 pandemic’s grip had been felt globally.

“The second one was made at the point when the financial markets were wobbling, but we still felt a conviction that it was an attractive entry point. With the third, the timing was such that we were able to confirm that demand for that type of real estate had increased this year as more money was allocated into this sector. It was a unique opportunity,” Heijbel said.

Alecta’s real assets team started researching the healthcare, life-science and elderly theme in 2017, but it took until 2019 to execute the strategy.

“Now we have an interesting pipeline there, and we continue to believe this sector is interesting going forward,” Heijbel said.

Alecta also has its eye on other themes within US real estate which are less correlated to GDP development. “We believe multifamily is going to remain a very attractive real estate segment, and another example is logistics assets as digitalisation drives demand for e-commerce - there has been evidence for this in development in the second half of 2020,” he said.

Alecta also believed in some ESG-related themes for real estate, Heijbel said, but it remained a question when the right time would be to go into retail again, and office, with these sectors having been hit by the effects of the pandemic, he added.

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