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Another MOB Sales Record: $25 Billion In 2022

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Perhaps James A. Schmid III, chief investment officer and managing partner with Media, Pa.-based Anchor Health Properties, summed up how many successful healthcare real estate (HRE) investment and development firms are going about their business at a time when costs and interest rates are on the rise.

“Last year, 2022 was certainly a pivot point, I think, both for our sector as well as commercial real estate and the economy as a whole,” Mr. Schmid said. “It was, in aggregate, a very successful year for us as we closed just over $600 million of new acquisitions, monetized and or recapitalized several hundred million of developed and/or owned assets … and monetized a strategic position in our operating business with a client of Stepstone Real Estate, an international offshore client.

“That being said,” he added, “as the market has continued to move, with interest rates continuing to rise as the (U.S. Federal Reserve Bank) increases rates, we’ve continued to be more and more selective about decisions we make, particularly with new investments – trying to be thoughtful about what where we want to own and why, trying to focus on our areas of strength and scale across our platform.

“This is also true on the development front, where we continue to be extremely active. We really haven’t seen much of a slowdown in development; if anything, we’ve seen a continued acceleration in development in different parts of the country, particularly high growth markets where health systems and physician clients alike have a continued need for more and more specific space for clinical use.”

Mr. Schmid was a guest speaker during a fourth quarter (Q4) subscriber webcast hosted Jan. 24 by Arnold, Md.-based Revista, a data firm that provides a wide variety of statistics on the HRE sector to its subscribers.

The $2.2 billion of MOB sales in Q4 will likely, when all of the transactions are recorded, rise about 30 percent, to about $3 billion, according to Revista. (Slide courtesy of Revista)

The webcast led by Revista principals Mike Hargrave and Hilda Martin focused heavily on medical office building (MOB) market data during this time of inflation and rising debt costs, with much of that data reaffirming what a strong industry the HRE sector continues to be.

 

Source: HREI

Anchor Health Properties Acquires A Class A Medical Office Building In Nashville

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Anchor Health Properties, a national, full service healthcare real estate development, management, and investment company focused exclusively on healthcare facilities, has recently closed on the acquisition of a two story, 29,738 square foot Class A medical office building located in the growing Antioch / Airport South submarket of Nashville, Tennessee.

The asset was acquired through a joint venture with an institutional equity partner.

Strategically located in a dense commercial and retail corridor, the facility at 330 Wallace Road features proximity to TriStar Southern Hills Medical Center, a 126-bed comprehensive facility offering a variety of acute care services and is within seven miles of downtown Nashville.

Constructed in 2006, comprehensive renovations were completed in 2020, including new HVAC units, landscaping and stie improvements, updated signage, and other mechanical and cosmetic enhancements.

The MOB is 84% occupied by a desirable roster of clinical medical tenancy, including Nashville Gastroenterology & Hepatology, a renowned local practice providing diagnostic gastroenterology and endoscopy services and Sanitas Medical Center, a national provider of primary care and urgent care services with more than 50 locations. A wholly-owned subsidiary of Keralty, a global health organization, Sanitas Medical Center is also partnered with Blue Cross Blue Shield (Moody’s Baa1) in Tennessee.

The anchor tenancy is joined by an additional synergistic mix of clinical services, including an imaging clinic operated by Nashville Pain and Wellness, orthopedics, rehabilitation, and dentistry.

“Advantageously situated in close proximity to TriStar Southern Hills Medical Center, we view this asset as a core, long-term holding of ours and look forward to supporting the best in class clinical medical tenancy there,” shared James Schmid, Chief Investment Officer and Managing Partner with Anchor. “As we join the neighboring community, this asset represents our sixth acquisition in Tennessee and our second significant investment in recent months as we continue to build scale across the broader Nashville MSA, which is one of Anchor’s largest markets by square feet managed. Our local office now offers ten team members with a healthy mix of experience across all of our platforms and as we continue to expand our ‘boots on the ground’ presence here, we expect to be investing more heavily in the MSA as well.”

Leading the acquisition process, Albert Lord, Investment Associate with Anchor, echoed Mr. Schmid’s sentiments, “This transaction further expands our footprint in the high growth Nashville market. The property offered an attractive opportunity to invest in a recently renovated facility in a location with desirable demographics, and to begin long-term relationships with highly respected physician groups. It was a pleasure working with all parties involved, including our partners at Harrison Street, CBRE Nashville, and Capital One. We’re excited to see the success of this investment and its tenants over time.”

Frank Thomasson, First Vice President with CBRE provided sales advisory services on behalf of the Seller. Capital One provided secured debt financing. As the new owner of the facility, Anchor Health Properties will provide go forward asset, and property management services at this location.

About Anchor Health Properties

Anchor Health Properties is a national, full-service healthcare real estate development, management, leasing, and investment serving investors and health systems. Anchor takes a strategic approach to navigating the extremely competitive healthcare marketplace, considering multiple angles, such as retail drivers, customer experience, branding and efficiency of the project. We develop and manage projects across the United States that respond to the new landscape of employed physicians, team-based care, the need to optimize assets and reduce duplication, and the integration of care and technology. Anchor manages and leases seven million square feet of medical office space, inclusive of numerous projects under construction. Anchor maintains multiple offices nationwide and features 100 professionals in its ranks. Over the past five years, Anchor principals have acquired and/or developed more than $3 billion of medical real estate across the country. Healthcare today calls not only for new and more efficient ways of delivering outpatient services, but also a different kind of healthcare development and management company. For more information, visit: www.anchorhealthproperties.com.

 

Source: HREI

Joint Venture Kicks Off $100M MOB Fund

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Chestnut Funds and Anchor Health Properties have launched Chestnut Healthcare Fund II, a new investment vehicle centered on the acquisition of medical office buildings and other related health-care real estate assets across the U.S.

The $100 million real estate private equity investment fund will seek core and core-plus assets over the next 48 months.

“Chestnut Funds and Anchor anticipate many attractive investment opportunities in 2021 and beyond, with the fund focused on approximately 30 key markets across the U.S., where very specific potential investment targets are being identified,” James Schmid, chief investment officer & managing partner with Anchor Health Properties, told Commercial Property Executive.

The launch of Fund II comes five years after the initiation of Chestnut Healthcare Fund I, which, having raised roughly $50 million, will have completed its four-year investment period early this year with the acquisition of 52 assets via direct or joint venture transactions. Due to the U.S.’s aging population, expanded health insurance coverage and a shift in patient services away from hospitals, the medical office building sector has only grown more popular among investors since the 2016 introduction of Fund I. However, Anchor, which will co-manage Fund II with Chestnut Funds, is undaunted by the increased competition.

“There’s no question that institutional investors continue to recognize the performance of the sector across economic cycles and accordingly commit more dollars to sector investments. On behalf of Chestnut Healthcare Fund II, the Anchor team does an excellent job of sourcing off-market opportunities,” Ben Ochs, CEO & managing partner with Anchor Health Properties, told CPE.

Ochs’ assertion is not hyperbole; historically, more than 50 percent of Anchor’s closed transactions are sourced on an off-market basis.

“This allows the fund the opportunity to avoid broadly marketed processes and/or having to pay large portfolio premiums for aggregated asset pools while continually sourcing over $400 million of sector transactions per year,” Ochs continued. “Other investors new to the sector have found it more challenging to source transactions without deeply established relationships and a national infrastructure–elements notable within Anchor’s integrated operating platform of management/leasing, development and investment services.”

Pandemic-Resistant

While no sector of commercial real estate has gone completely unscathed by the COVID-19 pandemic, medical office buildings have survived the lockdowns and temporary halts in elective medical procedures.

“The strong performance of medical office and health-care real estate during the pandemic has really accelerated demand for these investments as a consistent source of stable cash yield and total return,” Schmid said. “While the period between March and June 2020 saw a modest pause in capital markets activity, new investment closings returned in a meaningful way in the second half of the year, and the pipeline of new attractive investment opportunities remains robust.”

Along with announcing the launch of Fund II, Chestnut Funds and Anchor disclosed that they have completed the inaugural seed investment with the purchase of 1408 3rd St. S.E., a 10,000-square-foot medical office building on the campus of Good Samaritan Hospital in the medical corridor in Puyallup, Wash. The high-quality, two-story, metropolitan Seattle property opened in 1997 and is presently occupied by MultiCare Health.

 

Source: Commercial Property Executive