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Transactions: 10-MOB Rendina MOB portfolio sold to Everest

Private equity investment firm acquires medical office buildings in five states

Harker Heights Medical Pavilion is a 60,000 square foot MOB on the campus of the Seton Medical Center in Harker Heights, Texas. 
(Photo courtesy of Rendina)

JUPITER, Fla. — As large and often institutional investors look to acquire medical office buildings (MOBs), they are typically attracted to portfolios – which help them add immediate scale – of high-quality, Class A facilities affiliated with strong healthcare systems.

In many cases, portfolios offered by well-known, reputable healthcare real estate (HRE) development firms fit this criteria to a “T.”

The only problem is, such portfolios don’t come along very often. That’s why a recent 10-MOB portfolio offering from Jupiter-based Rendina Healthcare Real Estate, which has developed 7.5 million square feet of MOB space during its time in the business, garnered strong interest from a variety of investor types.

The portfolio sale closed last week. The buyer and sale price were not disclosed. But industry sources confirm that the buyer was Scottsdale, Ariz.-based Everest Healthcare Properties LLC, a private equity investment manager focused on medical properties.

Marketing the portfolio and brokering the sale on behalf of Rendina were members of the Healthcare Capital Markets team with Chicago-based Jones Lang LaSalle (NYSE: JLL), led by Mindy Berman and Daniel Turley, both managing directors.

“We did have significant interest from all varieties of healthcare investors,” Richard Rendina, chairman and CEO, tells HREI. “Fifty-three investors signed CAs (confidentiality agreements) and we received five offers. Offers came from healthcare-focused firms, institutional investment managers and private equity firms.”

Interestingly, none of the offers came from healthcare-focused real estate investment trusts (REITs), Mr. Rendina notes, as those entities were not being aggressive buyers when bids were being received late in 2017.

Rendina decided to sell the portfolio because of the current strength of the MOB market.

Richard Rendina

“We acquired six of the 10 assets and they were value-add acquisitions,” Mr. Rendina says. “So monetizing was part of the investment strategy for those assets.”

The facilities are in what JLL calls “key growth markets” in Texas, South Carolina, New Jersey, Arizona, Virginia and Illinois. The portfolio represents a mix of “value-add and stabilized” facilities, and as a whole it is 87 percent leased with 34 percent of the tenancy comprising “strong, investment grade non-profit national and regional health systems,” according to JLL.

“This is a well-managed portfolio which attracted investors because of its scale, geographical diversity and high-quality assets,” said Ms. Berman in a news release. “Eight of the 10 properties are on medical campuses aligned with market leading health systems.”

She tells HREI that investors find value in acquiring healthcare properties from well-known development firms such as Rendina because such properties are “usually newer construction medical offices that enjoy sponsorship and occupancy from a health system or provider, and, thus, investors hope to draft off of the developer’s healthcare relationships” and “tap into the developers’ expertise about medical office design, development, property management and leasing.”

Rendina will continue to provide property management services for the portfolio.

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