Mountain View Medical Plaza is a 72,252 square foot, three-building, medical office complex at 9700 N. 1st St. in Scottsdale, Ariz.
The three-building, 72,252 square foot Mountain View Medical Plaza is the partners’ second joint acquisition and the 12th investment by MedProperties Investment Partners Fund
SCOTTSDALE, Ariz., and DALLAS, April 5, 2016 – MedProperties Holdings LLC has entered into a joint venture with Cypress West Realty Partners LLC for the value-added acquisition of Mountain View Medical Plaza, a three-building, 72,252 square foot medical office complex in Scottsdale.
The partners closed on the acquisition of the property on March 11, which has been added to the portfolio of investments of MedProperties Investment Partners Fund.
MedProperties is a Dallas-based private equity firm focused exclusively on investing in healthcare real estate. Cypress West is a Rancho Santa Margarita, Calif.-based firm that acquires, develops and manages healthcare properties.
Darryl Freling, MedProperties Managing Principal, says the acquisition of the 64 percent leased Mountain View Medical Plaza is right in line with the discretionary fund’s goals of investing in value-added acquisitions of existing properties, as well as new ground-up developments.
“This is our second transaction with Cypress West in Scottsdale and the 12th investment by MedProperties Investment Partners Fund,” Mr. Freling says. “We think this is an excellent investment by our fund due to the property’s many advantageous characteristics, including its strategic location adjacent to the HonorHealth Scottsdale Shea Medical Center campus, strong anchor tenancy, physician investment and a favorable purchase price.”
Mountain View Medical Plaza, which was built in 1985, was foreclosed upon during the economic downturn and has been in receivership. The MedProperties / Cypress joint venture acquired the medical complex from LNR, the servicer.
“Demand is strong for medical office space in the area,” Mr. Freling explains. “The vacancy in the property at the time of its acquisition was high primarily because LNR, the owner, would not provide tenant improvement dollars or leasing commissions, and as a result, the project was not actively marketed, nor did the brokerage community include the property on any tenant tours. MedProperties and Cypress West are confident that the property will experience robust leasing with the availability of a generous tenant improvement allowance, and with the building now under professional ownership.”
“The relatively low purchase price – which was less than replacement cost – also enables us to invest in significant capital and tenant improvements, while at the same time offering highly competitive lease rates that will make the complex very attractive to prospective tenants.”
“This asset fits well into our acquisition strategy and provides significant upside on two fronts: We formed a strategic alliance with two major healthcare providers in the market to assist with their immediate real estate demands and the investment solidifies our commitment to this recovering submarket.
Scottsdale has the perfect demographic, and this medical office campus is in an ideal location near a high-profile healthcare provider. It also represents one of the few remaining quality assets near the campus with large blocks of available, contiguous space,” said Christopher J Cumella of Cypress West Partners.
Erik Tellefson, Managing Director, Medical Properties, for Capital One, arranged debt financing for the Scottsdale acquisition.
As noted above, Mountain View Medical Plaza is strategically located adjacent to the Scottsdale Shea Medical Center campus of HonorHealth, which is the leading healthcare system in the Scottsdale area. The complex is 39 percent occupied by Scottsdale Medical Imaging (SMIL) the second largest radiology group in the region, which has agreed to extend its lease and expand its suite, which serves as the group’s corporate headquarters. Arizona Pulmonary Specialists recently leased about 8,100 square feet (11 percent) and a major orthopedic group that occupies about 5,000 square feet (7 percent) recently extended its lease to 10 years. Given the generous tenant improvements allowance to be provided by new ownership, the complex’s favorable location and the strength of the Scottsdale medical market, the property is expected to stabilize quickly.
Mountain View Medical Plaza is also located in close proximity to the Shea and Mescal Medical Office Portfolio, another portfolio acquired last year by a MedProperties/Cypress West joint venture.
About MedProperties
MedProperties Holdings LLC is a Dallas-based healthcare real estate private equity firm with offices in Greenville, South Carolina that provides qualified developers and owner/operators with a consistent source of equity investment for the development of new, or value-added acquisitions of existing, healthcare-related real estate projects, including both multitenant medical office buildings and single-tenant, specialty facilities, as well as selected senior housing communities. MedProperties invests through its discretionary funds: MedProperties Capital Partners LP, MedProperties Investment Partners LP and MedProperties Senior Housing Fund I LP, and is dedicated solely to healthcare real estate. For further information on MedProperties, please visit www.medpropertieslp.com.
About Cypress West Partners
Cypress West Partners LLC was formed through strategic affiliations with institutional investors, high-net worth individuals and family offices with the purpose to acquire, develop and manage healthcare properties across the Western United States. We believe that the greatest opportunity in healthcare is to understand and implement on all aspects of what makes a high-performing asset.
Our team is highly experienced at working across the healthcare spectrum, from institutional owners to hospitals and individual doctors. For this reason, we see things that others don’t and leverage that knowledge throughout our portfolio. The strength and legacy of our business model is in our method for successfully acquiring the right medical real estate assets backed by solid data analytics. We then focus on a strategic leasing and management plan to increase value at the property and investor levels. To learn more about Cypress West Partners, please visit cypresswestpartners.com.
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