UNITED STATES - Thomas Properties Group has created a new office building acquisitions joint venture with UBS Wealth Management to purchase assets in selected markets across the United States.
A total of $300m (€190.3m) has been invested in the deal, $250m of which is from UBS and $50m is from Thomas, so equity ownership will be split to equally approximately 85% to UBS and 15% to Thomas.
There are two significant factors on this strategy, one of which is the properties will be all-cash US acquisitions, according to John Sischo, executive vice president at Thomas Properties.
"The all-cash feature allows us to buy properties without having to put any debt on properties. This gives us an advantage, given the state of debt financing today. We could put debt on some deals if there is attractive assumable financing or if we find financing on our own."
Another key factor is the joint venture will be investing in core office assets which is a rare strategy under today's market conditions. Most US pension fund capital is currently being invested in non-core real estate.
"We figure that the JV will buy properties that can produce cap rates of 5-6%," said Sischo
This return is based on the existing rent in the properties now and the partnership is expected to buy offices in Los Angeles, San Francisco, San Diego, Houston, Seattle, Denver, Phoenix and Washington DC and Northern Virginia.
Its joint venture with UBS allows Thomas Properties to expand into the core sector of the marketplace as it has already established itself as a value-added office building player through several investment partnerships with the California State Teachers Retirement System (CalSTRS).
Thomas Properties and CalSTRS have made a total of $1bn of equity commitments and invested $3.5bn worth of transactions in value-added office building deals.