MedCraft Launches $500M Medical Office Acquisition Platform

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MedCraft Healthcare Real Estate and Cadence Healthcare Group, a wholly-owned subsidiary of Cadence Capital Partners, have formed MedCraft Investment Partners (MIP), a $500 million acquisition platform that will be active over the next 18 to 24 months. The platform is capitalized through an institutional partner.

MIP is led by MedCraft Principals Jon Lewin, Eric Carmichael and Keith Beneke and long-time healthcare real estate capital markets experts Michael Bennett and Jay Soave of Cadence.

MIP will offer co-investment opportunities in its acquired real estate and expansion of client ambulatory networks within its growing portfolio. MIP will also pursue complementary MOB assets and development from new third parties.

MIP has over $200 million in on- and off-market opportunities currently in the underwriting or LOI stage. With the MIP fund well on its way to achieving its investment objectives, the leadership team already has plans underway for a second, larger fund that targets more than $1 billion of MOB investments.

As many sectors have struggled through the pandemic, investors have shown interest in medical offices.

“The uncertainty caused by the COVID-19 pandemic seen in other real estate asset classes, such as retail and hospitality, is increasing investor interest in the stability of the MOB space, which benefits from significant long-term tailwinds, such as an aging population and increased healthcare spending,” according to the H2C Industry Insights Medical Office Building Quarterly Update 2Q20 from Hammond Hanlon Camp LLC.

 

Source:  GlobeSt.

Twenty-Nine Medical Office Building Portfolio Trades

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Healthcare Real Estate Capital (“HRE Capital”) acted as a financial advisor to Hammes Partners (“Hammes”) in its disposition of a 29-building portfolio of medical office buildings (the “Portfolio”).

The 1,226,312 square foot Portfolio features modern, well occupied assets with significant remaining average lease term and is geographically diverse, spanning Illinois, Wisconsin, Missouri, Ohio, Pennsylvania, Virginia, Washington D.C., Arizona, Texas, Mississippi, and Georgia.

The Portfolio includes on-campus, off-campus, and adjacent-to-campus locations and was transacted subject to assumption of existing debt.

HRE Capital’s Role

On behalf of Hammes, HRE Capital undertook a tailored effort to identify a well-capitalized investor (“Investor”) seeking a substantial and geographically diverse medical office building portfolio and who was positioned to (i) acquire the Portfolio, (ii) take full responsibility for assumption or prepayment of significant existing debt and (iii) close this sizeable transaction on a truncated timeline in the face of a national pandemic complicating diligence.

Leveraging its unmatched relationships in the sector, HRE Capital approached a pool of credible Investors that would allow Hammes to achieve its previously identified goals. With multiple offers in-hand from different types of Investors, Hammes ultimately selected a private equity real estate Investor with extensive experience in the healthcare real estate sector who provided the most attractive offer.

HRE Capital assisted Hammes in navigating the simultaneous completion of buyer diligence, negotiation of purchase and sale agreement, and assumption of existing debt across multiple lenders to successfully achieve a year end closing.

 

Source: HREI