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Three Healthcare Real Estate Professionals Launch Capital Healthcare Properties And Form Partnership With HSG Medical To Develop And Acquire Medical Office Buildings

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Three experienced commercial real estate professionals serving a niche in the national medical office building (MOB) sector have formed Capital Healthcare Properties to address the needs of leading healthcare systems, physician groups and specialty providers.

Daniel Ahlering, Jack Sullivan and Jay Heald, the firm’s founding principals, have also formed a programmatic joint venture partnership with HSG Medical, an affiliate of Hubbard Street Group, to facilitate and launch new development and acquisition initiatives.

Ahlering, Sullivan and Heald will draw on their recent experience with a Chicago-based MOB developer where they completed more than one million square feet in new developments and leasing assignments and earlier within the capital markets and tenant representation groups at JLL. Capital Healthcare Properties provides a comprehensive menu of services ranging from ground-up development to acquisitions to leasing of owned and third-party assets. On the development front, the joint venture will target medical office buildings ranging from 20,000 to 100,000 square feet.

“Our primary goal in forming Capital Healthcare Properties is to leverage our collective experiences, resources and relationships to lessen a client’s real estate burden. This allows them to focus on providing tremendous patient care, their core business,” said Jay Heald, Managing Partner, Capital Healthcare Properties.

In partnering with HSG Medical, Capital Healthcare Properties will draw on the experiences and expertise of the two HSG Medical Principals, John McLinden and Kage Brown. Combined, the Principals of HSG Medical have over 45 years of national real estate development experience and have developed over 12.5 million square feet and 5,000+ residential units, exceeding $3 billion in aggregate capitalization for these projects.

“Strategically we believe the health care industry represents a huge growth opportunity for commercial real estate,” said Kage Brown, Principal, HSG Medical. “In the aftermath of the pandemic, medical offices remain one of the most resilient and recession-resistant commercial real estate sectors, with low correlation to greater economic and geopolitical trends.”

HSG Medical will provide capital, investment oversight, accounting and administrative services along with office space for the joint venture. The partnership will operate independently from Hubbard Street Group.

The principals’ resume of involvement in new development projects includes work with Northwestern Medicine, Advocate Health, Northwest Community Hospital, HonorHealth and The CORE Institute, among others, in Illinois and Arizona. The development projects, with varying degrees of complexity, range in size from 20,000 to 180,000 square feet. Further, several projects were awarded national and regional awards for development excellence. Specific project highlights include:

• Oak Brook Commons, a 180,000-square-foot ground-up development for Northwestern Medicine that was completed in the fourth quarter of 2022 and is located in Oak Brook, Ill.

• NCH Buffalo Grove Outpatient Care Center, a 71,000-square-foot ground-up development for Northwest Community Hospital that was completed in the third quarter of 2021 and is located in Buffalo Grove, Ill. The project has been recognized for excellence by a variety of healthcare and real estate organizations.

• Mercy Medical Commons II, a 60,000-square-foot ground-up development anchored by The CORE Institute that was completed in mid-2020 and is located in Gilbert, Ariz. The project has been recognized for excellence by a local real estate media outlet.

“Delivering successful outcomes is all about relationships, tactical execution and regular communication during all phases of a client project,” said Dan Ahlering, Managing Partner, Capital Healthcare Properties. “Our collective experiences and contacts in the industry, and our partnership with HSG Medical, give us the tools and insights to uniquely serve our clients and redefine the client-service provider relationship.”

The Healthcare Environment

Despite many issues facing the healthcare sector—labor shortage/costs, supply chain issues, inflation and reimbursement pressure, etc.—there remains a tremendous need and appetite for outpatient medical office investment and development. This is due to a variety of market forces that include a shift in patient care preferences away from hospitals to outpatient and ambulatory surgical centers.

The shift already was occurring with policy/regulation changes, purchaser preferences, innovation and a lower provider operating cost, and then was exacerbated during and post-pandemic.

Outpatient facility revenue is estimated to be approximately 50% of hospital revenue and those facilities provide a lower cost basis versus inpatient or HOPD sites. According to Kaufman Hall and JLL, outpatient revenue grew by 8% in 2022. Further, the JLL report says outpatient demand for ages 55+ alone is forecast to grow 16.9% by 2025.

“Hospitals, healthcare systems and physician groups recognize the need to invest in their outpatient strategy, especially as the healthcare environment, business climate and patient preferences constantly evolve,” said Jack Sullivan, Managing Partner, Capital Healthcare Properties. “We’ll make those investments more sound because of the depth of resources we bring to each assignment.”

 

Source: HREI

GFH Financial Group Acquires U.S. Medical Offices Portfolio In $400M Deal

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GFH Financial Group, an investment bank based in Bahrain, has acquired a portfolio of medical clinics in the US in a deal valued at $400 million, expanding its real estate portfolio in the world’s largest economy.

The income-yielding medical clinics portfolio consists of 11 assets with more than one million square feet of space and is spread across California, Texas, Maryland and Louisiana, GFH said.

“We are pleased to announce the acquisition of this prime, income-yielding medical clinic portfolio as part of GFH’s ongoing expansion in the medical office building sector in fast-growing cities across the US,” Nael Mustafa, co-chief investment officer of real estate at GFH, said. “We believe strongly in the long-term fundamentals in the healthcare sector and the dynamics that are supporting an increase in demand for high-quality medical office space.”

To date, GFH has built a portfolio of assets in the US medical office building sector valued at $1 billion. In December, it acquired a portfolio of medical offices in the US in a deal valued at $200M. The medical offices portfolio consists of 11 assets with more than 400,000 square feet of space spread across North Carolina, South Carolina, Georgia, Utah, Wisconsin, Ohio and Texas.

The latest portfolio is anchored by investment-grade credit tenancy through Baylor Scott & White (Moody’s Aa3), Texas A&M Health Science Centre (Fitch: AAA), Texas Tech University (Fitch AA+), Memorial Hermann (S&P A+) and Tidal Health (Moody’s Aa3), GFH said. The assets also offer unique specialisations within their respective submarkets, positioning them for high occupancy and rent growth, it added.

The medical clinics sector has been strong performing and proven to be highly resilient to economic downturns — with 99 per cent rent collection during the Covid-19 pandemic. The sector also benefits from population growth and the aging US population accompanied by an increase in healthcare expenditure, which accounted for nearly 19 per cent of the US GDP last year, GFH said.

“Aging populations and growth in outpatient care … continue to make the sector highly recession-resilient and unimpacted by economic cycles. We look forward to working with our partner Big Sky Medical to maximize the value of these assets,” Mr Mustafa said.

GFH’s partnership with Big Sky has resulted in a number of acquisitions totalling nearly $500M in the past six months. This transaction is the third in a series of joint acquisitions.

GFH Financial Group reported a 10 per cent increase in its second-quarter profit as investment banking income and income from co-investments rose as the company continues to boost its portfolio around the globe.

Net profit attributable to shareholders of the bank for the three months to the end of June climbed to $23.06M compared with $20.92M during the same period last year.

 

Source: The National News

AEW, Cypress West JV Buys Four-Property Medical Office Portfolio In Florida

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Newmark announced it advised on the sale of a four-property, medical office portfolio on behalf of Miami-based PrimeMed Realty, LLC (“PrimeMed”).

The portfolio totals 96,395 rentable square feet of medical office and ambulatory surgery center space located throughout the Greater Orlando and Miami areas of Florida. The properties were leased to a diverse roster of health system, physician group and specialty care provider tenants. Two of the properties are strategically located adjacent to leading health system acute-care hospital campuses.

Newmark’s Healthcare Capital Markets group, including Managing Director John Nero, Senior Managing Directors Michael Greeley and Jay Miele, Executive Managing Director Ben Appel, and Associates Ron Ott and Adam Goss, in cooperation with Vice Chairman Todd Perman, led the portfolio sale execution on behalf of the seller, PrimeMed. In addition, Newmark’s Boston-based Debt and Structured Finance group procured acquisition financing for the buyer, a joint venture between Boston-based AEW Capital Management and Cypress West Partners.

“We commend PrimeMed on the aggregation of a high-quality portfolio, which generated significant investor attention and interest given its alignment with leading healthcare providers and significant concentration within high-growth and attractive Florida markets,” said Nero.

“We were pleased with the market’s response to the portfolio investment opportunity and are excited to realize a successful transaction for PrimeMed and our investors through Newmark’s execution of a competitive process, led by John Nero,” concluded Chris Montello, Co-Founder of PrimeMed Realty, LLC.

 

Source: Newmark