Kuwait Finance House (KFH) recently formed an investment partnership with Grosvenor Investment Management US, Inc. (GIM), to invest in up to $600 million of U.S. healthcare-related real estate.
This marks KFH’s second investment partnership with GIM, which is a North American subsidiary of London-based Grosvenor Fund Management (GFM).
“The formation of this partnership reflects the strength of the U.S. healthcare sector, which is expected to benefit from attractive demand/supply characteristics, driven by favorable demographic trends and limited supply growth,” said Eric Cannon, Director of Acquisitions at GIM, in a statement. “During the recent economic downturn, the sector’s cash flows have proven more stable and less correlated with the overall business cycle than other major property types.”
The partnership will target acquiring and developing private-pay senior living facilities and medical office buildings in the U.S., with investments made through forming equity joint ventures with local and regional operating and development partners. GIM will oversee investment activities, including sourcing, underwriting, structuring, financing, closing, asset managing, and exiting the partnership’s investments, all of which will comply with Shari’ah (Islamic law).
“Growing healthcare expenditures both in absolute terms and as a percentage of GDP, coupled with increasing average life spans, are likely to drive demand for this sector well into the future,” said Ali O. Al-Ghannam, Head of the International Real Estate Department of KFH.
During the first investment partnership between 2004 and 2007, GIM sourced, structured, closed, and asset managed KFH’s first investment in the U.S. healthcare sector, acquiring a total of 15 New England senior living properties in a joint venture with Benchmark Assisted Living of Wellesley, MA. GIM then sold the portfolio on KFH’s behalf in Nov. 2007 for $268 million, for an internal rate of return of 26%.
Written by Alyssa Gerace