"We're a middle-market developer," explains Kerry Angus,principal with Oaks Development Group. "We don't look for200,000-sf buildings on hospital campuses. Our specialty is thesmaller suburban office buildings and sites." He adds that OaksDevelopment could be moving on Houston projects by midyear2008.

Angus says Oaks Development provides spec product, withphysicians ultimately signing 10-year leases. He says 50% of theownership is allocated to tenants from Day One. "There's no capitaloutlay required," he says. "We simply ask them to sign a long-termlease with us, and in exchange, they acquire tenant ownership inthe building." Ownership percentage is based on the amount of spacethat the tenant occupies. Tenants may acquire additional ownershipthrough an equity investment in the building, but Angus says it'snot necessary for them to do so.

In return, tenants receive distribution of operating profits andequity funds due to any refinancing of the building. OaksDevelopment assumes management of all developed buildings. Angussays rents are near the high end of market rates, but notexorbitant.