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IRA Capital Expands Medical Office Portfolio With Florida, Pennsylvania Acquisitions

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Southern California private equity firm IRA Capital (“IRA”) announced the acquisition of two ambulatory surgery center facilities in the Florida and Pennsylvania markets.

The Florida property is 100% leased to The Center for Specialized Surgery (“TCSS”), an orthopedic-focused surgery center operated by Regent Surgical Health (“Regent”) in partnership with Lee Health, a leading health system in Southwest Florida.

The Pennsylvania property is leased to Pocono Ambulatory Surgery Center (“PASC”), a multi-specialty surgery center operated by Surgical Care Affiliates (“SCA”) in partnership with Lehigh Valley Health Network (“LVHN”), a leading health system in the Lehigh Valley region.

The Center for Specialized Surgery – Lee Health

The Center for Specialized Surgery is located in Fort Meyers, Florida and comprises approximately 9,000 Square Feet. The 3-OR facility was built in 2012 and is operated by Regent Surgical Health in partnership with 8 physicians from Orthopedic Specialists of Southwest Florida, whose offices are located adjacent to the center. The surgery center specializes in a full range of spine and orthopedic procedures, including total joint replacement. The property is situated across the street from Lee Health’s 415-bed Lee Memorial Hospital, the only Level II trauma center between Miami and Sarasota. In 2019, Lee Health acquired a majority interest in the surgery center partnership.

Pocono Ambulatory Surgery Center – Lehigh Valley Health

Pocono Ambulatory Surgery Center is located in Stroudsburg, Pennsylvania and leases approximately 32,000 square feet of the facility, which features three operating rooms, a mix of pre and post operation bays, an X-Ray room, and several pre-operation exam rooms. The center employs more than 35 surgeons, and offers ambulatory procedures in more than 15 specialties including gastroenterology, plastic, colon-rectal, ophthalmology, orthopedic, podiatric, and ENT surgery. IRA and PASC signed a new long-term lease for the facility as part of the transaction.

IRA Capital continues to be among the most active healthcare real estate investors, with these latest transactions representing the company’s thirteenth and fourteenth healthcare acquisitions in the past 75 days, totaling over $270 million. According to IRA Capital partner Amer Kasm, the key factors in IRA’s investment decision included each center’s strong performance and position within their respective markets, along with the financial backing of leading health system and the operational expertise provided by top-notch surgery center operators. IRA has continued to strategically grow its portfolio, and has remained focused on being a valuable partner by providing solutions to its tenants and partners during these uncertain times.

 

Source: HREI

Medical Office Building Investors Will Be Chasing Deals In 2020

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As we prepare to swing into the new year, the outlook for the medical office sector is good…largely.

Underpinning the market, as it always has, is the continual aging of the population and the increased medical services that come along with it.

But, despite this sure-bet demand, the sector is not without its challenges, as Al Pontius, SVP and national director of Marcus & Millichap’s Office and Industrial divisions, makes clear. Those concerns arise as a result of the massive industry trend toward consolidation and the move on the part of many formerly independent care providers to saddle up with national care brands.

The firm’s second-half Medical Office Buildings Report defines the growth of the merger movement:

“Hospital and health-system merger activity continues to transform the medical office sector, driving a reduction in physician-owned practices in recent years. In 2012, nearly half of locations were physician-owned practices, but in 2018, just 31 percent were owned by doctors.”

And therein lie the concerns for the existing stock of medical office buildings (MOB).

“There’s a lot of older-vintage product that’s not located where the health systems want to be,” says Pontius. “Some assets may not accommodate the desired configuration of services that the major health systems see as appropriate, modern enough or technologically supportive enough. Consequently, there are a number of buildings that will under-perform relative to newer properties in the sector as well as other asset classes.”

But while there might be assets that sit on the sidelines as healthcare needs grow, few investors, be they institutional or private, are doing the same.

“The consolidation has supported investor sentiment as major providers create efficiencies and broaden service coverage,” says the report. “A sizable pipeline of new space and major expansions by high-credit tenants will sustain elevated investment activity through the end of this year.”

 

Source: GlobeSt.