The fully leased, 32,471 square foot Redhawk Medical Center in Temecula, Calif., was purchased at a favorable price, providing plenty of upside potential for its new owners
TEMECULA, Calif., and DALLAS. March 28, 2018 – With a favorable purchase price, immediate cash flow and plenty of upside, the 32,471 square foot Redhawk Medical Center in Temecula is the most recent “find” for MedProperties Holdings LLC and Cypress West Realty Partners LLC.
MedProperties Holdings, a national healthcare real estate private equity firm headquartered in Dallas, formed a joint venture for the acquisition with Cypress West, a Rancho Santa Margarita, Calif.-based firm that acquires and manages healthcare properties.
The Redhawk acquisition, which closed March 15, was the fifth JV acquisition for MedProperties Holdings and Cypress West, and the 19th investment by MedProperties Investment Partners Fund.
The fully leased, multi-tenant medical office building (MOB) is located in the Wine Country of Southern California, less than two miles from the 140-bed Temecula Valley Hospital, a multispecialty acute care facility that opened in 2013. The MOB is anchored by McKesson – US Oncology, Pediatric Partners and California Imaging & Diagnostics, which represent a combined 52 percent of the overall tenancy.
“We saw this as a great valued-added investment opportunity for several reasons,” MedProperties Managing Principal Darryl Freling explains. “In the opinion of our firm, and Cypress, the purchase price cap rate was well above market for a southern California MOB, and the purchase price was well below replacement cost. Based upon what we believe to be a true market cap rate for the asset, it will deliver value-add returns despite being fully stabilized with long-term leases.
“In fact, the property has already topped our projections, as the purchase price was determined based upon an occupancy of 95 percent, but the vacant space was filled during due diligence, bring it to 100 percent occupancy by the time we closed. The additional lease will be accretive and provide incremental revenue and value upon exit, creating value-add returns to the fund.”
The Redhawk acquisition is also a good fit with the goals of MedProperties Investment Partners Fund, MedProperties Managing Principal Roman Kupchynsky notes.
“We invest in joint venture partnerships with qualified developers of medical offices and single-tenant specialty facilities, and with owner-operators of existing facilities where there is the opportunity to add value,” Mr. Kupchynsky explains. “Here was have both an asset that meets all of our investment criteria and a proven partner in Cypress West. This transaction checks all the boxes and should perform well for our fund investors.”
CIT Bank arranged debt financing for the Redhawk acquisition.
MedProperties is a Dallas, Texas based healthcare real estate private equity firm that invests on a direct and an indirect basis (through joint venture relationships) in the development of new, value-add, and stabilized healthcare real estate, including multitenant medical office buildings and single-tenant, specialty healthcare facilities throughout the U.S. MedProperties invests through its discretionary funds, and through stand-alone investment vehicles. MedProperties is dedicated solely to investments in 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. At Cypress West, the team is focused on understanding and implementing on all aspects of what makes a high-performing asset.
Cypress West is highly experienced at working across the healthcare spectrum, from institutional owners to hospitals and individual doctors. The strength and legacy of its business model is in Cypress West’s method for successfully acquiring the right medical real estate assets backed by solid data analytics, followed by a strategic leasing and management plan to increase value at the property and investment levels. To learn more about Cypress West Partners, please visit cypresswestpartners.com.
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