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Fund Of Texas-Based Skywalker Property Partners Targets $250M In Investments, Including Medical And Senior Housing

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Skywalker Property Partners has become the latest investment firm preparing to take advantage of turbulence in the commercial real estate market, with the launch of its fourth and largest fund,

The Leverage Strikes Back LLC, that has the capacity to make up to $250 million of opportunistic investments in Texas and surrounding states.

Skywalker Property, the fund’s manager, completed the $20 million capital raise during the first quarter of the year. The fund will target investments with opportunistic return profiles in the $10 million to $30 million range. Investments could vary from brick and mortar to note-buying to joint venture equity, including distressed assets and new developments. The acquisition strategy will focus on multiple asset classes, including medical, senior housing, residential, retail, mixed use, office and industrial, with the goal of completing the investments by December 2025.

The company’s first investment will be in a project in the Interstate 35 corridor in Texas, but executives did not provide further details on the transaction.

“We anticipate the CRE market will be faced with a wave of maturing loans held by owners who will be struggling to refinance under-performing projects amid tighter capital conditions,” Gary Walker, founder & president of the Arlington, Texas,-based firm, said in a prepared statement. “The new fund is well-positioned to capitalize on those opportunities.”

William Welder, Skywalker Property’s director of acquisitions and capital, called the new fund a milestone for the 33-year-old firm.

 “It is the largest fund in the company’s history and a significant shift from its two-year focus on dispositions,” Welder said in prepared remarks

Welder joined Skywalker Property in 2021 after leading commercial real estate lending for one of the nation’s largest financial institutions.

“The firm has longtime relationships with community banks and will use its deep ties in the CRE and banking communities to source investments,” Welder said.

The team expects opportunities to increase if interest rates remain at the current level or tick up, further impacting the availability and affordability of capital for critical needs, including refinances. Providing joint venture equity, for example, would be a value-add opportunity for developers and investors facing capital shortages for construction starts, completions or improvements to existing projects being primed for repositioning.

Previous Transactions

Skywalker Property identifies, underwrites, acquires and executes highly opportunistic and value-add investments on behalf of funds including When Opportunity Knocks LLC and Cash Flow Fever LLC. The firm currently has a portfolio of about $200 million of office, industrial and retail properties in Texas and surrounding states.

At the end of 2022, Skywalker Property sold three office properties in North Texas and Oklahoma on behalf of three managed funds. The properties sold were Brookhollow Riverside, a 119,121-square-foot office building in Grand Prairie, Texas; Crescent Parc, a 61-unit medical and office condominium in McKinney, Texas; and a 36,590-square-foot office building that houses Miller-Motte College in Tulsa, Okla.

In September, the firm invested in a shuttered 116-bed assisted living and skilled care facility in Waco, Texas, with Utah-based Zelevie Health that has been rebranded and reopened as Zelevie Health of Waco. The investment was made by Come Together Prop Co LLC, a single-purpose entity of Skywalker’s When Opportunity Knocks investment fund and marked Skywalker’s entry in the asset class.

Also in September, Skywalker sold 141,480-square-foot One Northwind Plaza, an eight-story office building in Houston acquired in March 2018, to Versa Creative Tower LLC. It had been the firm’s first Houston asset and was purchased on behalf of its When Opportunity Knocks fund.

 

Source: Commercial Property Executive

Davis Launches MOB Investment Fund With Eight Acquisitions In Transactions Totaling $194 Million

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 Minneapolis-based Davis has kicked off its new medical real estate investment fund with a series of thirteen transactions totaling 536,362 square feet and $194 million in value.

Davis Medical Investors, LLC closed on the acquisitions of eight medical office buildings (MOBs) totaling 309,735 square feet during the first two weeks of December for a total of $112 million. Three of the properties were sold into the fund from existing Davis-affiliated partnerships and five were newly acquired from third parties.

“This is just the start of what we expect will be a fund of 20+ medical office buildings totaling up to $240 million,” says Mark Davis, Founder and Managing Partner of the national healthcare real estate development, property management, brokerage and investment firm. “We are looking for $125 million of medical building acquisitions in 2021, and we’re highly motivated, flexible and quick in closing on these assets.”

Stewart Davis, Davis Executive Vice President – Investments, said,  “These facilities fit our MOB acquisition criteria to a “T” in terms of deal size, type of property and tenancy, occupancy level, market, and location. In addition, as these acquisitions are growing our portfolio of assets, they are also growing our property management portfolio. These transactions are the culmination of many months of hard work. Despite some of the acquisitions being temporarily put-on hiatus because of COVID-19, we stayed in close contact with the sellers to ensure we successfully brought these deals to fruition.”

The eight properties are in Tennessee (three), Minnesota (three), Ohio and Connecticut. The Tennessee and Connecticut acquisitions are the firm’s first in those states. The portfolio includes all Class A and Class B+ off-campus assets that have an average building age of 10 years. They house a diverse mix of tenants with a stable overall occupancy of 99 percent and a weighted average lease term of more than eight years.

The properties are:

• Hartmann MOB, Tenn., 50,951 s.f., 93% leased
• Smyrna MOB, Tenn., 37,566 s.f., 96% leased
• Crossings MOB, Tenn., 38,852 s.f., 100% leased
• M Health-Fairview, Minn., 18,672 s.f., 100% leased
• Cornerstone MOB, Minn., 52,904 s.f., 100% leased
• Midwest ENT – Vadnais Heights, Minn., 12,000, 100% leased
• The Urology Group MOB, Ohio, 55,000 s.f., 100% leased
• EastPoint MOB, Conn., 43,790 s.f., 100% leased

The capital behind the new Davis Medical Investors Fund included long-time Davis partners as well as the participation of a strong Davis institutional partner. Capital One is providing the financing for the new Fund.    

“Capital One is pleased to expand our relationship with Davis on the transaction, which provides them with room to grow. We are excited to continue to work with this excellent borrower now and in the future,” says Erik Tellefson, Managing Director, Capital One.

“Davis is an existing Capital One borrower and it is phenomenal to close this credit facility with them. We have big plans with them from a lending standpoint,” says Natalie Sproull, Senior Director, Capital One.

About Davis

Davis, founded in 1986, is a national healthcare real estate firm that offers unparalleled expertise in healthcare real estate development, property management, brokerage, investment and consulting services to health systems, hospitals, individual medical groups, specialty practices and other healthcare organizations. Over the past five years, the company has developed 31 Class A medical buildings totaling $300-plus million in development costs and completed 43 investment transactions totaling more than $700 million. It has also negotiated more than 300 healthcare property leases totaling 1.5 million square feet during that time. For more information, visit www.davishre.com.

For more information about the firm’s MOB acquisition criteria, visit https://www.davishre.com/wp-content/uploads/2020/12/Investment_criteria_7.pdf.

 

Source: HREI

Medical Real Estate Still The Best Way To Keep Your Portfolio Healthy

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In 2018, the JSE’s SA listed property index dropped 25%. In 2019, the total return from the index was 1.92%, well below inflation. In the first five months of 2020, the index shed 39%.

Although dividends from listed property grew by 8-12% a year between 2014 and 2017, growth slowed to 3.5% in 2019, which again was below inflation. In response to the economic fall-out from Covid-19, many property companies have warned they will withhold dividends this year to strengthen their balance sheets and until they understand the full fallout from the pandemic.

The data is not looking encouraging.  Office tenants are cutting space wherever possible, having learned that their reduced workforce can work from home. Retail is under enormous pressure across the board, from the legendary brands like Edgars to the smaller independent brands, and restaurants that just don’t have the fire power to recapitalise and pay rents in a market where there are still restrictions and the consumer is unable to come to the rescue.

What’s more, if you are in the hotel and hospitality industry, then there is really no clear path to recovery at this stage and the losses will be devastating.

There’s no refuge in residential property, either. The Lightstone Residential Property Index shows national house price growth in SA peaked at 6.25% in 2014 and has slowed since then to a five-year low of 1.7% in 2019. Lightstone expects, despite the recent interest rate cuts, that growth in the residential housing market will slow again in 2020.

Two specialized sectors of the property market have continued to deliver solid returns throughout the Covid-19 crisis. Logistics is one of the winners due to online e-commerce stores which have enjoyed a surge in online shopping.

The other big winner globally is medical office buildings, whose tenants mostly offer essential services. Even those who had been required to close are already benefiting from a post-lockdown surge in patient visits as medical procedures can, in most cases, not be postponed indefinitely. Think for a moment about your dentist, who will still need to attend to those fillings even if he could not see you over the last three months.

For South Africans who invested in offshore logistics or medical buildings, the rand returns have been considerably enhanced by the latest depreciation of the rand against the dollar.

In the US, the Covid-19 crisis has hit particularly hard, with 134,000 deaths by early July, amid total confirmed cases exceeding three million. Hospitals under pressure to clear wards and scale up for the anticipated flood of Covid-19 patients have had to postpone all elective procedures and turn patients away who were not critical.

This dramatically affected the income of all medical professionals who are not directly involved in treating Covid-19 patients, and has also affected hospitals’ revenue. Even as the US emerges from lockdown, patients choose to avoid traditional hospitals in fear of being exposed to the virus. This has been a boost for medical practitioners working outside the hospital systems, as patients have sought treatment from doctors working from these independent facilities.

Orbvest, which has 19 medical office buildings under management in three US states (Texas, Georgia and New Jersey), noted rental collections declined slightly in April, during lockdown, as about 21 tenants across the entire portfolio of over 100,000 square meters requested deferment.

But by end-June, the net collection of rentals was back to 97.6%, as both Texas and Georgia re-opened their economies, and collections for the month of July already are close to normal. The nett result of the pandemic on our projected revenue will be negligible and we expect to have fully recovered before year end.

Medical property investment was not an unexpected beneficiary of the Covid-19 crisis. The argument for buying into a building tenanted by medical professionals, especially in the US, makes fundamental sense in the long term. In the US, the aging population is growing and requiring more medical care. An investment delivering a proven 8% p.a. in US dollar dividends paid quarterly, plus a capital gain share at the end of the investment period, is an essential part of a diversified portfolio for South African investors.

 

Source: Daily Maverick