Lending for life sciences – how Coutts supported a specialist property venture

Identified by the UK Government as a crucial growth-driving sector in their flagship ‘Invest 2035’ industrial strategy, life sciences are set to have an enormous impact on the world’s healthcare and its economy. Supporting that development are specialist property ventures such as that undertaken by Gen Two and Barwood Capital to redevelop specialist laboratories as part of the Cambridge science hub.

“Our developments are designed to support science occupiers across all sectors,” explains Ariel Levy, Director of Gen Two Real Estate. “We aim to provide flexible property, offering a more affordable rent compared to the more established science parks which can be up to £80 per square foot.”

The space provides an excellent opportunity to reconfigure additional units into sustainable, best in class laboratories in the leading biotech and life sciences cluster says Edward Henson, Barwood Capital’s Head of Transactions. “We’ll also be able to support life sciences businesses, notably Constructive Bio and Alchemab Therapeutics, which are both well-capitalised, exceptional Cambridge-based businesses working on some amazing scientific advancements to help immunity and antibody development. Our goal is to help them, and others, grow through exceptional laboratory space at this excellent location.” 

That goal is already being achieved as the Whittlesford labs are helping further advance the groundbreaking technological work being done by research company Constructive Bio at The Recodery, including writing genomes from scratch and creating entirely new biomolecules. They leased one of the 10,800 square foot buildings in Whittlesford last year and the larger facilities have allowed them to continue to hire and expand, ensuring their milestones are met and thereby securing £46 million from a Series A financing round. 

Supported by Coutts as a financial backer, Gen Two and Barwood Capital have been able to tailor the property to accommodate the specific demands of the research conducted there – from gas storage to power provision. “Given the high stakes of their research, maintaining uninterrupted power supply is essential,” says Ariel. “For Constructive Bio’s work in Whittlesford, we made the strategic decision to forgo one parking space to install a 200 KVA generator. This generator ensures that, in the event of a power failure, all critical equipment remains fully operational, safeguarding the integrity of vital experiments.”

By prioritising sustainability Gen Two and Barwood Capital have also been able to reduce long-term costs, ensuring efficiency and lower carbon emissions explains Ariel: “Both laboratory buildings have an EPC A rating and are fully electric, eliminating the need for gas. The buildings were repurposed from existing structures, retaining the steel frames to reduce embodied carbon and the building envelopes were overclad to enhance thermal performance and reduce external heat transmittance. 1 Lion Works (Alchemab building) also features a rooftop array of photovoltaic (PV) panels.”

Danielle Sheppard, Barwood Capital’s Head of Performance and Impact adds, “our sites are designed to achieve an EPC rating of A — the highest possible energy efficiency standard — while attaining relevant environmental accreditations where applicable and ensuring a positive social impact. We are committed to meeting the highest environmental standards and invest in solar energy wherever feasible to ensure long-term energy efficiency.”

The loan from the Real Estate team in Coutts Commercial helped secure and develop the two Lions Works laboratories in Whittlesford. However, understanding, timeliness and flexibility were equally as important as finance says Ariel. “Coutts demonstrated exceptional responsiveness throughout the financing process. They were able to offer terms at a loan-to-value ratio and rate that aligned with our business plan, so they really did help ensure the project’s financial viability.”

As the loanee, building a trusted relationship with Gen Two and Barwood Capital was key explains Ross Ironside, Coutts’ Head of Real Estate. “It was great to work with them, as a pre-existing client we know them well and that they have the expertise to make the project a success. Though this is our first life sciences venture we were reassured by how well they knew the sector, from identifying a brilliant location, to aligning with their tenants’ specific needs. We were involved from the early stages of the deal and were able to build a lending solution that works well for all parties.

“Mutual growth is always the best outcome and we are already talking to them about a much bigger site in Cambridge. It’s an exciting sector to be involved in and it has great potential growth, so there’s a real premium in being a pro-active partner for them.”

Proactivity goes a long way in a nascent sector adds Ariel, highlighting how sharing and building knowledge has underpinned a positive financing relationship – “It’s vital for our financial partners to have a deep understanding of the unique dynamics and requirements of this market – from flexibility in supporting innovative occupiers to the long-term growth potential of the sector. Coutts were really proactive in taking the time to do this and even joined us on tours of the laboratories and similar spaces across the wider market.” 

The short-to-medium-term plan for the Lion Works estate is to solidify its position as a leading biotech hub by redeveloping further units in Whittlesford. Gen Two and Barwood Capital will focus on attracting additional occupiers and delivering fitted spaces which can be tailored to meet their clients’ specific and exacting requirements. Ultimately, their investment should ensure the laboratories continues to support innovation and growth in the life sciences sector.

“It’s a privilege to work with clients working in such innovative spaces,” says Ross. “Hopefully, we can continue to support Gen Two and Barwood Capital as they help grow the UK’s life sciences sector.”