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Reit Report: C-V II nears its closing to investors

Carter Validus Mission Critical REIT II has made $1.4 billion of acquisitions

By John B. Mugford

A number of years ago, non-traded real estate investments trusts (REITs) were among the major buyers of healthcare real estate (HRE), including medical office buildings (MOBs).

The landscape has changed since then. Although they are still investing, even the three most-active non-traded REITs investing in HRE facilities are not making as big of a splash as they once did. These non-traded REITs, which continue to buy properties, are Irvine, Calif.-based Griffin-American Healthcare REIT IV; the newly formed Orlando, Fla.-based CNL Healthcare Properties II; and Tampa, Fla.-based Carter Validus Mission Critical REIT II (CVMC REIT II).

The latter of those, CVMC REIT II, recently announced that it will be closing to investors soon. In a statement from the company, new investments into the REIT’s initial public offering (IPO), priced at $10.20 per share, will close on Nov. 24, 2017, or when the company reaches a total of $2.25 billion raised. The REIT’s sponsor, Tampa based Carter Validus REIT Management Co., has not indicated, at least publicly, whether it will start a third non-traded REIT.

However, even though it will no longer be open to new investments in coming weeks – except as part of its distribution reinvestment plan (DRIP) – CVMV REIT II still has plenty of capital to invest, both with cash and leverage, for its targeted property types: net leased data centers and healthcare facilities, including MOBs, rehabilitation facilities, and others.

As of Sept. 28, 2017, CVMC REIT II had made purchases totaling $1.404 billion since making its first purchase in August 2014. That means it will still have capital to invest, both cash and leverage, to make acquisitions after the closing of its IPO.

So far, CVMC REIT II’s portfolio comprises 64 properties, 44 of which are healthcare facilities and 20 of which are data centers. It has a leverage ratio of 46 percent on its purchases.

It’s most recent healthcare purchases came in late August and early September, when the REIT paid $9.6 million for the 26,127 square foot Silverdale Healthcare Facility and $6.95 million for the Silverdale Healthcare Facility II. The buildings are in Silverdale, Wash., on the Kitsap Peninsula across Puget Sound from Seattle.

CVMC REIT II, as its name suggests, is the second non-traded REIT sponsored by Carter Validus. The first CVMC REIT still exists but was closed to new investments in 2014 after raising $1.8 billion and investing about $2.3 billion into netleased data centers and healthcare assets.

Disclaimer: The author has no financial position in the companies mentioned and this article does not constitute an investment recommendation.

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