Simeon Seeks $150M Joint Venture Partner

SAN FRANCISCO-Simeon Commercial Properties Inc. is seeking an institutional partner to form a $150-million joint venture focused on its area of expertise, which is acquiring and developing life science real estate throughout the San Francisco Bay Area.Locally based Simeon says the JV will utilize approximately 60%-65% leverage. Management believes investors can expect leveraged returns of 16%-18%. Silver Portal Capital has been retained to market and structure the joint venture. Burl East, a managing principal at Silver Portal Capital, tells GlobeSt.com that Simeon would use properties from its existing portfolio to seed the joint venture. Simeon’s current investment pipeline is comprised of nearly 900,000 sf of existing buildings and 180,000 sf of new development potential. Unlike the cyclical office market, East says the market for lab space is secular, which is to say it tends not to suffer overbuilding and isn’t as affected by an economic downturn. As an example, he says that while office space in the Bay Area is 25% to 30% vacant, lab space is has a vacancy rate in the single digits.Simeon has had numerous relationships with institutional investors in the past, but they have typically been one-off projects, whereas this partnership would be more programmatic. As for the structure of the JV, that will be negotiated, says East. Typically, the operating partner would handle acquisition, leasing, development and management and would be reimbursed or otherwise compensated for the services.”We think we have a unique combination of skills which allow us to produce strong risk-adjusted returns,” says company CEO Russ Pitto.