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Remedy And Kayne Anderson In Joint Venture Buy 13-Property MOB Portfolio In 8 States For $131M

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Remedy Medical Properties, in a joint venture with Kayne Anderson Real Estate, has acquired the Project Prism medical office portfolio, a collection of 13 properties in eight states totaling 300,328 square feet.

The fully leased assets traded for $131 million, with the participation of JLL. The previous owner was Montecito Medical Real Estate, CommercialEdge data shows.

The medical office buildings are leased on a long-term basis with a weighted average lease term of 10.4 years.

 “The properties’ tenants have strong patient bases and track records, some of them being nationally renowned companies,” Remedy CIO Joe Magliochetti stated in prepared remarks.

Optum-Marsh, Halo Breast Center, Jordan Young Institute and Precision Spine Care are some of the health-care providers that occupy the facilities. On-site medical services include orthopedics, neurology, gastroenterology, radiology, imaging and surgery, as well as general spine and pain management, family medicine and other services.

Previous Joint Venture Acquisitions

The Project Prism portfolio is not the first acquisition for the Remedy-Kayne Anderson duo, as the joint venture’s purchasing history dates back to early 2022. In February, the partnership, alongside MedProperties Realty Advisors, formed a $350 million-plus joint venture to recapitalize a 23-asset health-care real estate portfolio totaling more than 1 million square feet.

Later that year, the companies added eight medical office buildings to their joint investments. The properties, located in Florida, Texas, North Carolina and Tennessee, changed hands for $91 million.

 

Source: Commercial Property Executive

Kayne Anderson Reportedly Set To Close $2.5B Fund With Eye Toward Medical Office Buildings

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In a move underscoring growing demand for medical office, Kayne Anderson Real Estate is set to close a $2.5 billion fund expected to spend approximately half of its money on the asset class, the Wall Street Journal reported this week, citing sources familiar with the fund.

While medical office buildings sales volume slowed in 2020, they performed better than most asset classes during the pandemic. A report from Colliers earlier this spring noted that MOB investment decreased 12.2% year-over-year in 2020 to hit $11.1 billion, while cap rates fell 20 basis points to 6.5%. But when compared to overall CRE, which posted a 32% decline in sales volume overall, those numbers look good.

“Cap rate stability reflects the continued desirability of healthcare as it became one of the most essential sectors in 2020,” Colliers said in the report, noting that investors view MOB as safe and durable even in the face of economic shockwaves.

The sector also saw an increase in activity in Q4, with sales volume rising to $3.6 billion from $2.1 billion in Q3.  Private equity investment led acquisition activity last year, accounting for 67% of total volume.

Investors may find, however, that supply will be an issue for the sector this year: aside from new construction, the market has a somewhat limited supply of investable inventory, according to Colliers, with healthcare systems holding nearly two-thirds of all healthcare real estate. The firm notes that with 30 million new square feet of new space expected this year, demand is still expected to outpace supply.

Experts also note that investors looking to repurpose office assets for medical uses should know that “it’s really not that easy,” according to Pete Bulgarelli, president and CEO of Lillibridge Healthcare Services and executive vice president, office, Ventas, who made the comments on CBRE’s ‘The Weekly Take’ podcast. The issue boils mostly down to the way in which physicians deliver care and utilize their space.

There are some headwinds that could slow the asset class’ performance. Medical office REITs could face some disruption as changes like telemedicine continue to change the way care is provided. While the overall impact of telehealth is still TBD, a recent BTIG notes that some features are already becoming clear.

“This trend is partially reorganizing the system by bringing care to the patient rather than the patient to the healthcare while treating them as a consumer,” BTIG analysts wrote. “Recent years have seen a continued push to move care to the lowest acuity setting, and with advancing technology that setting might increasingly be the patient’s home.”

 

Source: GlobeSt.

CIT Serves As Sole Lead Arranger On $48 Million Portfolio Financing Of Medical Office Buildings

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CIT Group Inc. announced that its Healthcare Finance business served as sole lead arranger of senior debt financing aggregating $48 million for the acquisition of a portfolio of medical office buildings.

The borrower is a joint venture between Kayne Anderson Real Estate and Remedy Medical Properties. The portfolio properties are located in four states and collectively total more than 189,000 square feet. They include:

• The Bon Secours Medical Office Building  in Chesapeake, Virginia

• The Locust Grove Medical Center in Locust Grove, Georgia

• The Spectrum Medical Office Building in Gilbert, Arizona

• The Arizona Spine and Joint Medical Office Building in Mesa, Arizona

• The Plano Medical Office Building in Plano, Texas

“These medical office buildings are modern facilities in attractive locations, easily accessed by healthcare patients and providers,” said Peter Westmeyer, CEO, Remedy Medical Properties. “We are pleased to add these properties to our portfolio and appreciate CIT’s agility and expertise in arranging financing.”

“Kayne Anderson Real Estate and Remedy Medical Properties are well-known as leading investors in medical office buildings and other real estate,” said William Douglass, managing director and group head for CIT’s Healthcare Finance business. “We are excited to have expanded our relationship with the Kayne Anderson/Remedy joint venture through providing this very important acquisition debt financing.”

CIT’s Healthcare Finance unit, part of the Commercial Finance division, provides comprehensive financing and banking solutions to middle market healthcare companies across the U.S. By using a client-focused and industry-centric model, the Healthcare Finance team can tailor its products and services to help clients meet their needs for growth capital.

 

Source: PRNewswire