Grosvenor links up with Islamic bank in US real estate drive

The fund management arm of the Duke of Westminster’s property company, Grosvenor, has formed an investment partnership with one of the world’s leading Islamic finance banks.

Grosvenor Fund Management, a fund manager with £3.9bn of funds under management, and Kuwait Finance House will together invest £380m in US healthcare-related real estate. It is the second partnership deal of its kind between the two companies.

Over the next seven years, the investment vehicle will target the acquisition and development of private-pay senior living facilities and medical office buildings in the US.

Investments will be made through the formation of equity joint ventures with local and regional operating and development partners.

Grosvenor Fund Management will oversee all investment activities, including sourcing, underwriting, structuring, financing, closing, asset managing, and exiting the partnership’s investments.

All of the investments will be designed to comply with Islamic shariah law.

The partnership with KFH signals the third new investment vehicle announced by Grosvenor this year. The fund manager said it had committed more than one-third of its £900m investment capacity announced so far this year. Projects include a joint venture with the Canada Pension Plan Investment Board to invest in London’s West End office market over the next two years and the acquisition of a portfolio of four retail properties in Sweden.

Grosvenor first worked with KFH in 1999. Between 2004 and 2007, it sourced, structured, closed and asset managed the Islamic bank’s first investment in the US healthcare sector, when it acquired a total of 15 senior living properties in New England. The 1,174 unit portfolio was sold by Grosvenor in 2007 for $268m to GPT Group of Australia.

Grosvenor, a property company privately owned by the Duke of Westminster, launched its first fund in 1976. Grosvenor Fund Management was formally established in 2005, and offers a range of sector and specialist property investment funds.

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