Louisville's Faulkner Real Estate Corp., one of Kentucky's largest developers of commercial properties, plans to spin off a new company that will specialize in the development, acquisition and management of health care-related real estate.

The company has hired David Laird, a top executive from Norton Healthcare Inc. to lead the venture.

Faulkner Healthcare Real Estate will launch May 1 as a separate company with its own identity, logo and Web site, www.faulknerhealthcare.com. But it will operate under the Faulkner Real Estate umbrella.

Faulkner Real Estate, which will continue to develop Class A office space and commercial retail centers, already owns a significant medical office portfolio in Louisville that it manages and leases for Norton.

The new company will pursue development and acquisition deals outside of Louisville, said Fred Faulk­ner, president of the commercial real estate firm.

"We're trying to develop relationships with health care companies for long-range planning," essentially becoming "part of their real estate department," he said.

"It is obviously a big leap to go outside of your market with any product," he added. "I'm really confident with our platform for business and the staff that we have in place."

Faulkner Real Estate currently has about 40 employees, more than half of whom are involved in the management and operation of the company's health care property portfolio.

More than half of the company's revenue in 2005 was generated by its medical office space, Faulkner said. He declined to disclose those figures.

Faulkner said it has not been determined whether his company's existing medical office portfolio will remain tied to Faulkner Real Estate or Faulkner Healthcare. It also hasn't been decided whether any current employees will be switched over to the new company.

Both entities will operate from Faulkner Real Estate's current headquarters at 9625 Ormsby Station Road in Hurstbourne Green.

Laird has extensive health care industry experience

Laird, 59, has been senior vice president of strategic initiatives and service line operations for Norton.

He will be a partner in the new venture and in coming projects with Faulkner and three other executives who also are owners of Faulkner Real Estate. They are Steve Higdon, Lee Hasken and Bryan Kiesewetter.

Laird has an extensive background in the industry. During his eight years with Norton, he held a number of posts, most recently leading a for-profit division of the company that provides capital to fund future system needs. Prior to joining Norton, Laird was involved in the management of four medical-related startup companies. He began his health care career in 1974 with Humana Inc., where developing hospital networks in Europe was among his responsibilities.

Laird's charge with the new firm will be to talk with health care and hospital executives across the country about Faulkner's partnership with Norton in Louisville and to explain to them the benefits they can realize by entering into a similar arrangement.

"There's no better person to tell that story than somebody who's been down that road," Faulkner said. "David has a very entrepreneurial flair. I think he sees it. He gets it. He'll be able to tell this story in the right way."

Laird, who has known Faulkner for more than 20 years, sees great prospects for the new company.

"All hospital systems have an opportunity to monetize these assets," giving them more value, he said.

Existing portfolio has six medical office buildings

In Louisville, Faulkner Real Estate owns six medical office buildings encompassing nearly 700,000 square feet on the campuses of three Norton hospitals. The average occupancy is above 90 percent, and the majority of the tenants are doctors affiliated with the hospitals.

Three of the buildings are located at Norton Suburban Hospital on Dutchmans Parkway. Those properties, totaling 366,000 square feet, are Suburban Medical Plaza I, II and III.

Two of the buildings are located on the Norton Audubon Hospital campus off of Poplar Level Road. Audubon Medical Plaza East and West total 155,000 square feet.

The final property is a 124,000-square-foot office building on Norton's downtown medical center campus.

Russell Cox, Norton's executive vice president and chief operating officer, praised Faulkner's partnership with the health care company and described Laird as "a perfect fit" to lead the spinoff.

Partnership with California REIT could bolster company

The new real estate company will target urban areas, properties on hospital campuses and projects with a value of $10 million or greater, Faulkner said. No deals are in the works, although initial contacts are being made with potential new business partners, he said.

The new company will be marketed through traditional means, including brochures and letters, and by mining Laird's extensive list of contacts.

Faulkner Real Estate already has software and infrastructure to accommodate its new venture, Faulkner said. Additional employees will be needed as Faulkner Healthcare ramps up operations in other markets.

Faulkner Real Estate also has an ongoing relationship with Health Care Property Investors Inc., the nation's largest real estate investment trust that focuses exclusively on properties serving the health care industry, Faulkner said.

HCP, which is based in Long Beach, Calif., and trades on the New York Stock Exchange under its acronym, is an investor with Faulkner Real Estate on five of its six medical office properties.

The REIT is "looking to go into other projects with us," Faulkner said.

He added that Faulkner Healthcare also will be looking for partnerships with other REITs, private investment groups and conventional banks. "There's a lot of capital out there right now."

Talya Nevo-Hacohen, HCP's senior vice president for capital markets and treasurer, declined to comment, citing the REIT's policy to not speak with members of the media outside of conference calls.

Move may be unique among real estate firms

Cox, of Norton, predicted success for Faulkner's coming venture, saying hospitals' dollars are better used by investing in technology and patient care than in bricks and mortar. He added that the real estate firm has become "quite expert" in managing medical office properties.

For a health care company, "you have to have a great deal of trust in that other party who's handling real estate for you because you still have skin in the game when it comes to physicians who inhabit those offices," Cox said.

"You have to have a very high level of trust to turn that over to someone," he said. "There's not a lot of (real estate) folks out there who specialize in that."

Fredric Halperin, president of the Los Angeles-based National Association of Real Estate Investment Managers, agreed that there appear to be few commercial real estate firms at a national level specializing in medical office space. He said that he hasn't heard much discussion about investing in health care properties among the 84 members of his association. But, he added: "That doesn't mean it isn't happening."