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New JV to Acquire $500M of Medical Office

SAN FRANCISCO-Locally based fund advisor Rreef is the money partner and the expertise partner is Denver-based NexCore Group, a medical real estate firm.

By Brian K. Miller | Updated on January 26, 2006

SAN FRANCISCO-San Francisco-based fund advisor Rreef has begun leveraging $175 million of equity into $500 million of medical office space over the next couple of years. The investments will be made through a new joint venture with NexCore Group, a Denver-based medical real estate firm that manages a 1.4 million sf portfolio nationwide and has several projects in the development pipeline.

NexCore’s senior managing director Peter Kloepfer tells GlobeSt.com that about half of the investment activity will involve assets NexCore has ownership in and will develop on a go-forward basis. The other half will be assets acquired from independent third parties. Leverage will typically be 65% and there will be no geographic boundaries to the JV’s activities, he says.In explaining the venture, Kloepfer says the medical real estate market is fragmented and inefficient and is in the process of consolidating. With Rreef as the capital partner, NexCore wants to solidify its position as a national provider of medical real estate, he says. “We feel we have the most competitive capital source in the nation,” he says.

In explaining Rreef’s interest in the sector, the company’s director of research Asieh Mansour says the aging of the Baby Boomers, increased chronic illness among the growing senior citizen population and increasing life expectancy suggests US citizens will be consuming more healthcare and consuming it for a longer period of time. “A real estate strategy that takes advantage of these powerful demographic trends should be very successful,” he says.

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