Davis Launches MOB Investment Fund With Eight Acquisitions In Transactions Totaling $194 Million

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 Minneapolis-based Davis has kicked off its new medical real estate investment fund with a series of thirteen transactions totaling 536,362 square feet and $194 million in value.

Davis Medical Investors, LLC closed on the acquisitions of eight medical office buildings (MOBs) totaling 309,735 square feet during the first two weeks of December for a total of $112 million. Three of the properties were sold into the fund from existing Davis-affiliated partnerships and five were newly acquired from third parties.

“This is just the start of what we expect will be a fund of 20+ medical office buildings totaling up to $240 million,” says Mark Davis, Founder and Managing Partner of the national healthcare real estate development, property management, brokerage and investment firm. “We are looking for $125 million of medical building acquisitions in 2021, and we’re highly motivated, flexible and quick in closing on these assets.”

Stewart Davis, Davis Executive Vice President – Investments, said,  “These facilities fit our MOB acquisition criteria to a “T” in terms of deal size, type of property and tenancy, occupancy level, market, and location. In addition, as these acquisitions are growing our portfolio of assets, they are also growing our property management portfolio. These transactions are the culmination of many months of hard work. Despite some of the acquisitions being temporarily put-on hiatus because of COVID-19, we stayed in close contact with the sellers to ensure we successfully brought these deals to fruition.”

The eight properties are in Tennessee (three), Minnesota (three), Ohio and Connecticut. The Tennessee and Connecticut acquisitions are the firm’s first in those states. The portfolio includes all Class A and Class B+ off-campus assets that have an average building age of 10 years. They house a diverse mix of tenants with a stable overall occupancy of 99 percent and a weighted average lease term of more than eight years.

The properties are:

• Hartmann MOB, Tenn., 50,951 s.f., 93% leased
• Smyrna MOB, Tenn., 37,566 s.f., 96% leased
• Crossings MOB, Tenn., 38,852 s.f., 100% leased
• M Health-Fairview, Minn., 18,672 s.f., 100% leased
• Cornerstone MOB, Minn., 52,904 s.f., 100% leased
• Midwest ENT – Vadnais Heights, Minn., 12,000, 100% leased
• The Urology Group MOB, Ohio, 55,000 s.f., 100% leased
• EastPoint MOB, Conn., 43,790 s.f., 100% leased

The capital behind the new Davis Medical Investors Fund included long-time Davis partners as well as the participation of a strong Davis institutional partner. Capital One is providing the financing for the new Fund.    

“Capital One is pleased to expand our relationship with Davis on the transaction, which provides them with room to grow. We are excited to continue to work with this excellent borrower now and in the future,” says Erik Tellefson, Managing Director, Capital One.

“Davis is an existing Capital One borrower and it is phenomenal to close this credit facility with them. We have big plans with them from a lending standpoint,” says Natalie Sproull, Senior Director, Capital One.

About Davis

Davis, founded in 1986, is a national healthcare real estate firm that offers unparalleled expertise in healthcare real estate development, property management, brokerage, investment and consulting services to health systems, hospitals, individual medical groups, specialty practices and other healthcare organizations. Over the past five years, the company has developed 31 Class A medical buildings totaling $300-plus million in development costs and completed 43 investment transactions totaling more than $700 million. It has also negotiated more than 300 healthcare property leases totaling 1.5 million square feet during that time. For more information, visit www.davishre.com.

For more information about the firm’s MOB acquisition criteria, visit https://www.davishre.com/wp-content/uploads/2020/12/Investment_criteria_7.pdf.

 

Source: HREI

Welltower Recaps $550M Medical Office Portfolio Through Joint Venture With Wafra

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Welltower has recapitalized a medical office portfolio through a $550 million joint venture with global alternative investment platform Wafra.

Wafra now owns a 80% stake in the 24-asset portfolio, which is located in Texas, Florida, Minnesota, the Carolinas, Tennessee, California, Pennsylvania and Washington, among other states. The REIT is retaining a 20% interest in the portfolio, which is 97% affiliated with health systems. Welltower will also continue serving as asset manager and operator for the properties.

“The two companies may partner on other deals,” said Russell Valdez, Wafra’s chief investment officer. “We look forward to expanding our footprint together in these growing sectors with the shared goal of further collaboration on healthcare and other real estate opportunities.”

There is a case to be made that medical office assets will flourish as the pandemic passes. Cushman & Wakefield argues that the same drivers that fueled medical offices before the pandemic—namely demographics—will continue to support the sector’s growth. It also notes that healthcare spending is projected to increase by $1.9 trillion in the US alone between 2020 and 2027, per the Centers for Medicare and Medicaid Services.

 

Source: GlobeSt.

The Pandemic’s Impact On Health Care Design: Smaller, Flexible Spaces With Great Adaptability

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The pandemic rocked U.S. health care facilities in 2020, leaving them with falling revenue from moneymaking surgeries and ordinary care as physicians and nurses shifted their attention toward patients infected with the coronavirus.

But the real change will come three to four years from now, when the impact of new designs implemented on existing and new healthcare facilities are deployed based on what architects and physicians have learned over the past nine months.

“Health care clients are already shifting their focus and asking for smaller footprints and more space flexibility along with additional isolated, negative air pressure rooms,” said Architect and EYP principal Miranda Morgan, while speaking at Bisnow‘s ‘The Future of DFW Healthcare’ webinar. “The smaller footprints are just more efficient and lean. We are still providing everything that is needed, and we are still doing big huge patient towers. But instead of big luxury, patient rooms, clients are asking us to be closer to code and to get what you need in that space and provide the patient with a good experience, but don’t go overboard.”

A large focus of future design will be on keeping healthy and sick patients separate rather than feeding everyone through the same access points and maneuvering the same hallways. Luxurious common areas have lost some favor as health care systems shift toward making sure more rooms are available to isolate emergency care and hospital inpatients while also better managing various points of access to segregate healthy and sick populations on-site.

“We are examining the way patients flow through the facilities,” said Dwain Thiele, UT Southwestern Medical Centersenior associate dean. “Some of the most challenging are imaging facilities or places that previously did not have a large amount of space, hallways or waiting rooms. It is something we will be looking at in the future.”

“What we have seen through the pandemic from a needs standpoint is more access points for people to be seen and to have access whether through telehealth or smaller, faster clinics where people can get in and out,” Transwestern National Managing Director of Healthcare John Huff said. “I guess we realize we don’t all want to sit in a huge long waiting room for an hour.”

In the future, waiting rooms very well could be a thing of the past, with that square footage allocated to more isolated treatment rooms, health care experts said.

“Other trends here to stay include the ongoing push for more outpatient care centers and ambulatory facilities that can take care of non-life-threatening illnesses while hospitals are hit with pandemics,” Huff said.

“Technology also will play a significant role in reshaping the future of health care, with telemedicine, or remote health care visits, allowing hospitals to keep healthier patients away from pandemic-stricken areas,” Methodist Health System Chief Operating Officer Pamela Stoyanoffsaid. “I would say prior to COVID, we probably saw about 1% of visits in the outpatient setting with telehealth. In April and May, when we saw the first surge, we were probably up to 80% to 90% of our visits. When some of the restrictions lifted, telehealth usage dropped back down to 15%, but it’s expected to have a place in the future of health care services. It is now a massive part of what we do, and it is here to stay.”

 

Source: Bisnow