Medical Office Portfolio Commands $230M

MedProperties Holdings is the new owner of 17 multi-state Harrison Street health-care assets totaling 620,000 square feet. The transaction marks the company’s single-largest acquisition in terms of purchase price, number of properties and total square footage.
Grand Parkway MOB, Richmond, Texas
Grand Parkway MOB, Richmond, Texas

MedProperties Holdings has acquired the Harrison Street Portfolio, a diverse 10-state, 17-property, medical office building portfolio totaling 620,750 square feet, for approximately $230 million. 

“We are attracted to the healthcare real estate space and dedicated to this space because it is a very profitable niche, driven by the health service sector,” Darryl Freling, MedProperties’ managing principal, told Commercial Property Executive. “We are active buyers and sellers in the space, and when this attractive portfolio became available, we competed for it. It has a good diversity of product type, is located across 10 states and it has good hospital affiliations.”

The properties include Abilene Surgery Center and Hospital, Abilene, Texas; Texas Rehabilitation Hospital of Arlington, Arlington, Texas; Grand Parkway MOB, Richmond, Texas; Williams Way MOB, Richmond, Texas; Conroe Medical Plaza, Conroe, Texas; Kingwood Medical Plaza, Kingwood, Texas; Lake Granbury Medical Center, Granbury, Texas; Emerson Medical Office Building, Jacksonville, Fla.; Tower Pointe Medical Center, Greenwood, S.C.; Albany Medical Office Building, Clifton Park, N.Y.; Brandywine Medical Pavilion, Coatesville, Pa.; HealthSouth Rehabilitation Hospital of Cincinnati, Cincinnati, Ohio; Georgetown Medical Office Building, Georgetown, Ky.; Henderson Medical Office Building, Henderson, Ky.; Aurora Medical Office Building, Elkhorn, Wis.; Eastland Medical Building, Independence, Mo.; and Asheville Medical Office Building, Asheville, N.C. 

Capital One served as joint lead arranger, sole bookrunner and administrative agent for a $160.6 million loan to assist in the acquisition.

Diverse asset mix

“The diversity of the portfolio and the quality of the assets made the portfolio appealing. The portfolio was diversified by asset type, geographically and by tenancy with high-quality, strong assets,” Erik Tellefson, Capital One Healthcare’s managing director, told CPE. “The lending community had significant interest as evidenced by the five banks who participated in our syndication transaction.”

The portfolio includes a diverse mix of medical office buildings housing a wide range of services, as well as rehabilitation hospitals, a behavioral health hospital and a multi-use campus.

Williams Way MOB, Richmond, Texas
Williams Way MOB, Richmond, Texas

At the time of the sale, the portfolio was 92 percent leased. Prominent tenants in the facilities include Jacksonville, Fla.-based UF Health Jacksonville; San Francisco-based Dignity Health; Milwaukee-based Aurora Health Care; Englewood, Colo.-based Catholic Health Initiatives; and The Woodlands, Texas-based US Oncology/McKesson, among others. 

According to Freling, the acquisition is the single-largest portfolio acquisition MedProperties has made in terms of acquisition price, number of properties and total square footage. 

The medical office real estate market has been very active of late. In August, CBRE Global Investment Partners acquired a 95 percent interest in a 10-state, 25-building medical office portfolio, and IRA Capital LLC sold three Class A medical office properties totaling 137,686 square feet in Dallas–Fort Worth and Austin, Texas.

Images courtesy of MedProperties Holdings