US: JPMorgan Fleming Asset Management has established relationships with operating partners in senior housing, hotels and shopping centres to acquire assets for its commingled fund, the Special Situation Property Fund.
The move is reflective of the US investment market as a whole. Many managers are having a hard time finding assets to acquire on their own and there is a lot of capital looking for a home. In theory, the operating partners have the contacts and market knowledge to make deals happen.
JPMorgan Fleming has created a joint venture with Sunrise Senior Living Corporation to invest in upscale urban assisted-living developments. The deal is based on an 80% ownership for the manager and 20% for Sunrise. Deals for the venture will produce an internal rate of return (IRR) in excess of 20%.
JPMorgan Fleming works with Sage Hospitality Resources and Tishman Hotel Group for hotel purchases. Three assets have been acquired with a total equity investment of $74 million. The assets are located in San Diego, Denver and Chicago. These deals are producing IRRs in the mid teens.
There is a retail venture created with Florida-based Cypress Creek Capital. The investment strategy is to acquire grocery-anchored shopping centres in Florida. These assets will be in high-barrier-to-entry markets with strong demographics and good transportation routes.
The Special Situation Property Fund has total net assets of $1.53 billion. The total return for fiscal year 2005 was 21.7%. The projected total return for 2006 is 11—14%.
