REAL ESTATE – The US-based ING Clarion Partners has setup an investment joint venture for the first time involving office buildings with Montecito Medical Investment Company.
This venture represents another example of ING Clarion looking at specialised property types. The real estate manager in the past couple of years has invested in the non-core property types of hotels and self storage. Previous to this the manager was known strictly known as a player in core property types.
ING Clarion vice president Daniel Marks Cohen, who worked on the deal, said: "We believe in the demographics of the ageing population, which will not be changing any time in the near future. There is and will continue to be a need for more medical services. More out patient care is happening and this creates a demand for more medical office space."
The first properties for the venture have been purchased. These are assets in Tucson, Ariz, Vero Beach, Fla, Lawrenceville, Ga. and Columbia, Md. The total purchase price of the assets exceeded $90m (€68m).
ING Clarion made this investment for one of its commingled funds as it figures that the deals going forward would most likely be funded by its commingled funds and not separate account pension fund clients.
The firm thinks there are good investment opportunities in owning medical offices, Cohen said. "Less than 5% of medical office buildings in the US are in the hands of institutional owners. This gives us a chance to own some high quality assets."
The investment strategy going forward with Montecito Medical will be done on a deal-by-deal basis. There has not been a specific capital amount allocated for the relationship. Transactions will be brought in and funded one at a time.
ING Clarion is the main equity partner, with Montecito Medical acting more as the operating partner, as it will be responsible for sourcing transactions and managing the assets in the joint venture.
The investing strategy for the relationship covers several segments. Some will be the purchase of existing fully leased assets. Others will be investing in current properties that have redevelopment or repositioning potential. There will be some transactions that include investing equity in new development projects.
All of the transactions for the venture will be located in the US, typically located in the eastern seaboard, the south, Arizona and Texas. The transactions could involve investing in single assets or the purchase of entire portfolios, but only institutional quality assets will be considered.
Most of the transaction for the relationship will be in the range of $10 to $50m. Properties can be acquired with case or leverage.