Brackett, USAA RealCo Form Healthcare-Property Focused JV

USAA Real Estate Co. and Brackett Flagship Properties have entered into a joint venture to acquire, develop, manage and lease healthcare-sector properties throughout the Southeast.
309 S Sharon Amity Road in Charlotte NC

USAA Real Estate Co. and Brackett Flagship Properties have entered into a joint venture to acquire, develop, manage and lease healthcare-sector properties throughout the Southeast, and started the partnership off with the acquisition of a portfolio of nine properties totaling 315,000 square feet.

The portfolio contains properties in eight cities throughout North Carolina, South Carolina, and Northeast Tennessee.

One of the properties in the portfolio is 309 S. Sharon Amity Road in Charlotte, N.C., a medical office building with several medical tenants.

“We are pleased to be partnering with Brackett Flagship in these healthcare investment initiatives,” Len O’Donnell, USAA RealCo’s president & CEO, said in company release. “We believe strongly that the combined reputations of Brackett Flagship and RealCo will resonate in this sector, and position our partnership to be a preferred provider of real estate solutions for both independent physician practices and leading health systems in this region of the country.”

The partnership will target investments in primary and secondary markets in Tennessee, Southern Virginia, the Carolinas and Georgia, and will have the financial capacity to consider both acquisitions and ground-up development projects.

According to O’Donnell, eventually, the firm anticipates replicating this program in other regions throughout the U.S.

According to Marcus & Millichap’s Medical Office Research Report for Second Half 2014, the medical-office sector is booming right now thanks to expanded health insurance coverage and the overall aging of the U.S. population. In fact, its research shows that over the next decade, the 65-plus-age cohort, who average 2.5 times the number of physician-office visits than the rest of the population, will grow by 17 million.

“The shift toward a more consumer-centric delivery model, for example, has encouraged hospitals and health systems to bring more care into communities, mostly by way of outpatient facilities and satellite offices,” the report said. “These large providers tend to favor newer medical office properties, which typically offer flexible designs and incorporate features that promote efficiency and maximize space utility.”

Therefore, the lion’s share of new space demand is now being funneled into modern buildings, driving down vacancy rates and supporting above-average rents for later-vintage assets.

During the past year, medical office buildings with major hospital tenants traded for an average of nearly $270 per square foot, which reflects a roughly 40 percent premium to the overall market.