Capital Square 1031 Grabs Multi-State MOB Portfolio

The nine assets in Texas, Tennessee, New York, Michigan and Mississippi are 100 percent leased to Fresenius Medical Care, a provider of dialysis services and products.
Fresenius Medical Care in Fort Worth, Texas
Fresenius Medical Care in Fort Worth, Texas

Capital Square 1031, a Glen Allen, Va.-based real estate investment and management company, is expanding its medical office building holdings with the acquisition of nine properties in five states. Each asset is 100 percent leased to Fresenius Medical Care, which provides dialysis services and products. The deal includes properties in Texas, Tennessee, New York, Michigan and Mississippi.

The newly acquired assets are:

  • 5000 Campus Drive, Fort Worth, Texas, 10,640 square feet
  • 9449 Grogans Mill Road, The Woodlands, Texas, 6,865 square feet
  • 825-833 Dalworth St., Grand Prairie, Texas, 9,150 square feet
  • 222 E. Sinton St., Sinton, Texas, 8,000 square feet
  • 3600 Netherland Inn Road, Kingsport, Tenn., 7,028 square feet
  • 113 E. C Thurmond Cove, Martin, Tenn., 4,600 square feet
  • 220 Crystal Run Road, Middletown, N.Y., 10,000 square feet
  • 5205 McAuley Drive, Ypsilanti, Mich., 7,800 square feet
  • 241 Meadowlane St., Eupora, Miss., 3,215 square feet

“This is a diversified portfolio of well-located medical clinics with new 15-year net leases guaranteed by Fresenius Medical Care Holdings, an investment-grade company,” Louis Rogers, founder & CEO of Capital Square 1031, said in a prepared statement. “We believe that medical real estate is a stable and recession-resistant asset class. This healthcare-related portfolio is an attractive opportunity for investors seeking a safe investment because dialysis is a necessary and recurring medical treatment for more than 2.5 million Fresenius patients worldwide. By expanding Capital Square’s relationship with Fresenius, we are able to help a growing number of investors gain access to medical properties using the DST (Delaware statutory trust) structure.”

Expanding mode

Last December, Capital Square 1031 acquired a newly constructed medical office building at 711 Valley Blvd. in Tehachapi, Calif. The property, located one mile from Adventist Health Tehachapi Valley hospital, was 100 percent leased to Sanderling Renal Services, a healthcare company that also provides dialysis services. Earlier in 2017, the company also purchased a newly built, 8,200-square-foot medical office building in Louisburg, N.C., a Raleigh suburb. As of May 2, Capital Square 1031 had a national portfolio of 67 real estate assets valued at approximately $670 million.

“With approximately 18 percent of the U.S. gross domestic product, as reported by the Centers for Medicare and Medicaid Services, and resistance to economic downturns, healthcare has proven to be a growing industry and a premier real estate asset class,” Rogers stated.

In March, Rogers told Commercial Property Executive that medical office buildings were the hottest asset class other than multifamily, because investors understood medical needs increased as the population aged. He noted that need-based, recession-resistant qualities of medical care offered a safe haven for investors. MOBs are also attractive investments because of the shift away from hospital-based services, financially stable tenants with investment-grade credit, adoption of new technology, health-care job growth and tight market conditions. Net absorption has also outpaced new supply and gross asking rents have been stable.

Image courtesy of Capital Square 1031