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AEW JV Acquires Eight Medical Buildings In Seven States Across The Southern And Midwestern U.S.

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A joint venture between AEW Capital Management and Flagship Healthcare Trust have completed the acquisition of eight medical buildings totaling 145,561 square feet in seven states across the Southern and Midwestern U.S. in a series of compounding transactions.

The purchase was financed through a loan by Fifth Third Bank, who had secured a senior credit facility for the buyers. Following the acquisition, Flagship will provide property and asset management services for the portfolio.

The facilities, which consist entirely of ambulatory surgery centers, are located in Texas, Arizona, Michigan, Illinois, Missouri, Tennessee and Florida. Nearly all of the tenants leasing space within the portfolio specialize in health care, with three quarters of them in top five national surgery centers and health systems.

Two of the properties in the portfolio include the Kleimen Evangelista Eye Center, located at 350 E Interstate 20 in Arlington, Texas, and the Joliet Surgery Center, located at 998 129th Infantry Dr. in Joliet, Ill.

The Kleiman Evangelista Eye Center was built in 2015, and was previously owned by the Inland Real Estate Group, who had purchased it in 2017, according to CommercialEdge information. The property totals 27,500 square feet and is fully occupied by a leading Texas ophthalmology provider. Situated the Interstate 20 highway, the facility can be quickly accesses by patients throughout the suburbs of Arlington, as well as the larger Dallas-Fort Worth area.

Fifth Third Bank Executive Managing Director Michael Perillo oversaw the financing of the transaction.

The Medical Office Mires

Health-care and life science facilities remain a resilient commercial real estate investment, with investors eager to get their hands on these properties. The sector recorded more than $2.9 billion in transactions in the second quarter of 2022, according to data from a report from the Brown Gibbons Lang & Co. While that marks a slight decrease from the $3.3 billion in the same period of 2021, it significantly outranks activity in other office markets.

Market Street Health Properties and Sixth Street recently created a platform to invest $300 million in medical office buildings around the nation.

 

Source: Commercial Property Executive

Medical Office Building Sales Surpass $10 Billion For Fifth Consecutive Year

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U.S. medical office building sales continued in an upward trend through the fourth quarter of 2019 and into 2020, driven by steady M&A activity within the healthcare market, says Cleveland-based Brown Gibbons Lang & Company (BGL).

Total MOB sales reached $11.2 billion in 2019, marking the fifth consecutive year that sales surpassed $10 billion and the third successive year topping $11 billion.

“The 2019 tally underscores the fact that medical office properties remain a core asset class,” says BGL. “Demographic and healthcare industry trends are firmly entrenched and forecasted to persist, supporting long-term demand for medical office space.”

Q4 2019 saw a total of 379 MOB deals valued at $4.3 billion, representing a 20% increase in transaction value. The average price per square foot decreased by 8% to $274 per square foot. The cap rate remained unchanged to 6.6%, pushing the 12-month average to 6.6%—a marginal contraction from from 6.7% over the previous 12-month average.

Based in Chicago, MB Real Estate (MBRE) emerged with a 29% share of acquisition volume in the Southeast market and a 12% share nationally in Q4 2019, according to BGL. MBRE’s reach in the Southeast was underscored by the purchase of 900 Village Square Crossing in Palm Beach Gardens, Florida..

Completed in 2012, the two-story, multi-tenant building with 38,944 rentable square feet was acquired from Prestige for approximately $381 per square foot, which is 15% and 23% above the regional and national averages, respectively.

“While sales volume is down year-over-year, pricing remains strong across medical office investments as investors seek to take advantage of continued strength in the U.S. economy,” says BGL. “We continue to see strong demand for medical office assets from public and private REITS as well as private equity and foreign capital investors. Major players dominated M&A activity throughout 2019, which is likely to continue; however, new investors are entering the marketplace, which is setting the stage for a busy first half in 2020,” according to BGL’s report. It also cites a fact that bears repeating: “U.S. healthcare jobs outpaced nearly every other sector during 2019.”

 

Source: Connect Media