CalSTRS Places $500MM into New Life Science Fund with Longfellow

Longfellow, CalSTRS, California State Teachers Retirement System, San Mateo, San Francisco, Palo Alto, Redwood City, Emeryville, Millbrae, San Diego, Sorrento Mesa
Photo by Trnava University on Unsplash

By Jon Peterson

The life science commercial real estate sector has been on a tear over the last few years, and institutional investors across the globe are looking to increase their allocations into the space. One of the largest US pension funds, California State Teachers Retirement System, CalSTRS, has issued a $500 million commitment into the Longfellow SV Fund II, according to information that appeared in the pension fund’s real estate commitment activity report for the final six months of 2021. Longfellow, a Boston-based life science investment and development firm, has been growing rapidly across major markets in the United States. The commitment from CalSTRS is another validation of its strategy and its ability to attract top investors as partners.

Longfellow declined to comment on the commingled fund at this time when contacted for this story.

The commitment from CalSTRS will represent the first time that the pension fund has made a commitment with Longfellow, according to information provided by the pension fund. CalSTRS confirmed in an email that the commingled fund will only be investing in life science properties. Its commitment will be placed into the pension fund’s opportunistic sector of its real estate portfolio, which was valued by the investor at $7.2 billion as of the end of 2021. This information was stated by the pension fund in a report issued earlier this month.

SV Fund II is a closed-end commingled fund, and it will be targeting development opportunities, according to sources familiar with the fund’s investment strategy. Longfellow is known as a major player in life science assets. It is active in many markets along the West Coast. In Northern California, Longfellow has projects in San Mateo, San Francisco, Palo Alto, Redwood City, Emeryville and Millbrae, and in Southern California, it is active in San Diego and Sorrento Mesa, as stated on the company’s website. Its other active markets around the country include North Carolina, New York City, Boston and Cambridge, Mass.

CalSTRS is no stranger to investing capital in the life science sector. The pension fund has been active in this area dating back to 2015 when it closed on its first investment with the acquisition of Cambridge Crossing in Cambridge, Mass., as stated by the investor in its real estate commitment report.

The pension fund has partnered with top-tier universities and medical centers in the past, as well, including Georgia Tech, University of Chicago and Texas Medical Center to develop state-of-the-art campuses in top-ten markets such as San Francisco, San Diego, Seattle, Boston and New York. 

Strong sector tailwinds, the demand for purpose-built laboratory space, the convergence of innovations in robotics, genetics, artificial intelligence, and quantum computing are drivers for the property type that CalPERS believes will continue for the future.