Kuwait Finance House (KFH) has 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 is KFH’s second investment partnership with GIM. GIM is the North American subsidiary of London-based Grosvenor Fund Management (GFM).
The partnership will target the acquisition and development of private-pay senior living facilities and medical office buildings in the U.S. Investments will be made through the formation of equity joint ventures with local and regional operating and development partners. GIM will oversee all 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).
“We are very excited to continue investing with Grosvenor to expand our portfolio into this sector. 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,” stated Ali O. Al-Ghannam, Head of the International Real Estate Department of KFH.
“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, GIM. “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.”
“Healthcare is currently the nation’s largest industry and also its leading projected sector for job creation,” added Douglas Callantine, President, GIM. “We believe that now is an opportune time to be investing in this sector.
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 sold the 1,174-unit portfolio on behalf of Kuwait Finance House (KFH) in November, 2007 for $268 million, achieving an internal rate of return of 26%.