Chestnut Healthcare Partners, LP

Nationwide

  • Target Annual Cash 7-9%
  • Target IRR 12-14%
  • Target Equity Multiple 2.6x
  • Asset Profile Core Plus
  • Minimum Investment $100K
  • Estimated Hold 7-10Y
Chestnut Real Estate Chattanooga, TN

Office Fund

About this Fund

Chestnut Healthcare Partners, LP ("CHP") is a real estate investment fund formed to acquire and develop stabilized class A medical office buildings to create a compelling portfolio of properties that will provide investors with secure, non-correlated income from a property sector that benefits tremendously from demographic and healthcare trends. The partnership acquires properties directly and also invests in a joint venture with an institutional investor to acquire medical office buildings. The partnership intends to generate annual cash flow returns of 7% to 9% as a percentage of investor capital and then either sell the properties individually or as a portfolio to generate an expected IRR of 12% to 14%. The partnership utilizes low leverage for its investments to minimize volatility and decrease risk.

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Key Points

  • CHP invests in a joint venture with an institutional investor and the fund receives a disproportionate amount of the cash flow generated by joint venture investments. (In transactions where CHP contributes GP capital, CHP will participate in the promoted interest.)
  • The fund calls capital when it has investments and has called approximately 50% of committed capital to date; it is expected that the remaining committed capital will be called over the next two years
  • Medical office building investment benefits from favorable demographic trends due to growing demand for medical services and additional need for medical space
  • Real estate offers portfolio diversification from low correlation of returns with equities and fixed income
  • Real estate acts as an inflation hedge as real estate income can adjust with inflation due to ability to raise rental rates and leases often have fixed annual escalations
  • Medical office buildings offer durable income and appreciation because typically healthcare tenants operate under long term leases and have high renewal probabilities

Financials

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Offering Financial

Location Details

Nationwide

The target markets into which the fund intends to make its investments will be a function of the economic fundamentals of the market, the healthcare real estate investment market and the General Partner’s particular market expertise and relationships. In general, the fund will endeavor to invest in markets with strong economic fundamentals driven by such things as governmental and business investment, attractive and improving demographics, high barriers to entry reducing the risk of competition, and investment market liquidity enabling a timely and certain ability to exit the investment.

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Documents

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  • View, download, and print the detailed financial projections
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Offering Agreement Documents

Frequently Asked Questions

Below are some of the most frequently asked questions about this offering.

Investors coming into the fund after the first closing on December 31, 2015 owe to existing investors 8% per annum on the amount that the existing investors are diluted. As an example, if the fund had $10,000,000 of committed capital with 50% called at the first closing, and then had another closing in a year with another $10,000,000, the existing investors would be diluted 50%. In other words, the new investors would contribute $2,500,000 of capital, all of which would go back to the existing investors. The new investors would then also pay to the existing investors 8% on the $2,500,000, or $200,000. The thought here is two-fold. First, the new investors join the fund on the same terms as the existing investors, albeit with a higher basis. At the end of the fund all $100,000 investors, whether investing at the first or last closing, will receive the same gross distributions. The existing investors are also getting capital back that they don't necessarily want and at a lower return than they expect from the fund. And the new investors have the benefit of seeing a lot of the deals in the fund. In very general terms, for a $100,000 investor today the 8% interest charge that would be paid to existing investors would amount to around $3,500. This amount, though, would be offset by prior distributions made to existing partners. The fund has made distributions to date equivalent to 4% cumulative return and those distributions will offset the interest charge by roughly 50%. As a result the net charge to come in at a subsequent closing in this example would be about $1,750.

The first projected distribution is scheduled for May 2018.

Distributions are scheduled to go out on a quarterly basis.

Yes, non-US residents are welcome to apply. Please contact the sponsor for more details.

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Have a Question?

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