Ohio Bureau of Workers Compensation Fund (Ohio BWC) is committing $50m (€47.5m) to Hammes Partners III, a fund that specialises in medical offices.

Hammes is seeking to raise up to $700m for the fund, which will invest in medical office buildings and ambulatory care centres in the US.

Lee Damsel, director of investments for the Ohio BWC, said during a board meeting: “The impressive off-market deal flow from the manager’s broad network of medical relationships was the most impressive factor.

He added: “Hammes Partners spends a lot of time dealing with corporate suites of major hospitals and these contacts provide insight into future deals and developments.”

Jon Hammes, founder of the company, said: “Much of the sourcing for the fund will be done off-market and avoiding sales of properties by real estate investment trusts.

“Working on off-market deals allows for capital rate compression as there will not be five or 10 firms bidding on the same asset.”

Hammes is targeted returns in the mid teens for Partners III, three-quarters of which is intended to come from income.

Hammes will be investing in existing assets and development projects. It will limit developments and renovation at 35% and will avoid speculative development projects. Any development must be 50% leased before a new project is started.

The fund manager has deployed 92% of the capital for its $438m Partners II fund, with 80% in acquisitions and 20% for development.

There is $25m left to invest through one to three transactions.