Global Medical REIT Partners With Heitman For Joint Venture

Newmark Group Inc.’s Healthcare Capital Markets division has announced the recapitalization of two medical outpatient buildings spanning nearly 116,000 square feet in Texas and North Carolina.

This move sets the stage for a strategic joint venture between Bethesda, Md.-based Global Medical REIT Inc. and an affiliate of Heitman LLC, a global real estate investment management firm headquartered in Chicago.

The recapitalization, which was revealed in a Newmark press release on March 19, marks the beginning of the new JV. While specific terms were not disclosed, RevistaMed data suggests the transaction was valued around $35.2 million. This involved one MOB in High Point, N.C., and another in Fort Worth, Texas.

The High Point property, a two-story 97,811-square-foot facility known as Cornerstone Westchester MOB, was recapitalized for slightly over $28 million, equating to $286 per square foot. The Fort Worth asset, a one-story 18,084-square-foot property called Texas Digestive Disease Consultants MOB, was valued at approximately $7.2 million. Both deals closed on December 20, though they were not publicly announced until now.

The recapitalization was spearheaded by Newmark’s Vice Chairmen Jay Miele and John Nero, along with Vice Chairman Ben Appel and Senior Managing Director Michael Greeley. They, along with local licensees, represented GMRE and facilitated the partnership with Heitman.

According to Miele, GMRE’s proven track record and history of achievements generated strong interest from both current and potential investors. Nero also commented that the partnership with Heitman underscores GMRE’s strong acquisition and asset management platform.

This joint venture marks the first collaboration between GMRE, a net-lease medical real estate investment trust, and Heitman. Newmark, which has facilitated several GMRE asset sales in the past year, was tasked with identifying an exit strategy for these properties, which included considering a sale or recapitalization. The partnership to form a JV was particularly appealing to GMRE, allowing the REIT to continue investing through its balance sheet while also leveraging the JV to grow further.

Miele noted that Newmark spent about a year on the transaction, and he believes the two Class A, single-tenant properties will be an ideal foundation for future acquisitions within the joint venture.

The JV partners plan to build a larger portfolio. GMRE Chief Investment Officer Alfonzo Leon expressed enthusiasm about collaborating with Heitman, citing their experience in sourcing and completing over 230 transactions since 2016, amassing a $1.5 billion portfolio across 34 states with over 180 buildings, 400 tenants, and 4.7 million square feet of space.

Leon added that GMRE is excited to work with Heitman to expand their portfolio of high-quality medical outpatient facilities, leveraging GMRE’s industry insights, relationships, and asset management capabilities.

Heitman’s Brian Pieracci, Head of Private Equity – North America, shared his excitement about the partnership. He highlighted the favorable dynamics of the medical office sector, driven by the aging U.S. population and the shift toward outpatient care. He noted that these factors are expected to boost demand for services in medical office properties. He believes the seed properties offer compelling opportunities due to their strong income streams and market dominance.

Having been active in the MOB sector for over 20 years, Heitman has acquired, developed, and financed more than 250 assets, with a gross asset value exceeding $5 billion by the end of 2024.

Source: HREI