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.

The partnership's inaugural transaction was to recapitalize the Dry Creek Medical Campus, an 11-acre ambulatory care center in Englewood, CO, a Denver suburb. The transaction, which valued the asset at $24.8 million, involved NexCore selling an undisclosed interest in the asset to Rreef. The transaction was completed at the end of the year.

Looking ahead, Kloepfer says NexCore and RREEF plan to close on three more recapitalizations within the next month. Two of those deals are a $21-million recapitalization in Colorado that will close next week and a $30-million recap of an Illinois property that will close next month. The team is also working on several potential acquisitions, he says.

RREEF, a unit of Deutsche Bank, is one of North America's largest private property owners, with $27.5 billion in assets under management. NexCore has developed more than 3.8 million sf of facilities and currently manages a 1.4 million-sf $300-million portfolio.

Earlier this week, publicly held Nationwide Health Properties said it has entered into its own medical office joint venture with another Denver-based expertise partner, The Broe Cos. The JV completed the acquisition of 21 medical office buildings in Georgia, Louisiana, South Carolina, Tennessee, Texas and Virginia.

The deal included about 800,000 sf of primarily on-campus properties affiliated with Hospital Corporation of America (HCA) hospitals. The portfolio is about 82% occupied and will be managed by Broe's recently acquired medical office management division, InSite Properties.

Nationwide Health Properties has investments in 422 facilities in 39 states. Broe's InSite Properties division is a 25-year-old company with a 1.5 million-sf medical office portfolio.

"We want this venture to be a success and have incentivized Broe to make it so," said NHP chief investment officer Donald Bradley. "One of the benefits for us in entering into this joint venture is the opportunity to learn more about the MOB business that we hope will eventually lead to it becoming a part of our core business. The joint venture's goal is to acquire several more medical office properties over the near term."

Instant Insights /

New JV to Acquire $500M of Medical Office

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