News Release: MedProperties acquires Illinois surgery center

The acquisition of the Center for Minimally Invasive Surgery in Mokena is the Dallas-based private equity firm’s latest investment in a stabilized healthcare real estate asset

MOKENA, Ill., and DALLAS, March 23, 2016 – MedProperties Holdings LLC has acquired a Chicago-area surgery center, adding to the Dallas-based firm’s growing portfolio of stabilized, core and core-plus healthcare real estate assets.

MedProperties, a private equity firm focused exclusively on investing in healthcare real estate, acquired The Center for Minimally Invasive Surgery (CMIS) in Mokena.

Darryl Freling, MedProperties Managing Principal, says the CMIS Mokena transaction marks the fourth time the firm has implemented its recent strategy to expand into acquiring stabilized assets.

“The strategy of our discretionary fund, MedProperties Investment Partners, is to invest in new ground-up developments and value-added acquisitions of existing properties,” Mr. Freling explains. “However, as a national firm with investments and relationships from coast to coast, we frequently uncover attractive opportunities that don’t fit the mold of our fund. That’s why – separate from our fund – we have recently begun investing in stabilized, core and core-plus healthcare real estate assets.

“We closed our first stabilized acquisitions in May 2015. They included the Scottsdale Healthcare Rehabilitation Hospital in Scottsdale, Arizona, and the South Texas Spine and Surgical Hospital in San Antonio, Texas. We subsequently acquired the Warm Springs Rehabilitation Hospital Kyle, Texas, a facility that is affiliated with Seton Hospital in Austin. So, the CMIS Mokena transaction marks our fourth acquisition of a stabilized property.”

MedProperties acquired the one-story, 28,334 square foot CMIS ambulatory facility from Surgical Care Affiliates Inc. (SCA). The facility, which is situated on 3.55 acres at 19110 Darvin Drive in Mokena, includes a 14,000 square foot surgery center with four operating rooms; a 5,350 square foot recovery center with five overnight stay rooms; and medical office space making up the balance of the square footage. The surgery center was built in 2002; the recovery center and medical office was added in 2008.

The real estate acquisition opportunity presented itself early this year when SCA closed on a majority interest in the CMIS business and the accompanying property, as part of SCA’s strategy to make selective acquisitions of existing surgical facilities. SCA then spun off the real estate to MedProperties in an off-market deal that closed Feb. 26, with CMIS signing a new 15-year lease. The real estate transaction was brought to MedProperties by Chad Henderson, CEO of Pensacola, Fla.-based Catalyst CRE, through his strategic partnership with SCA. Catalyst continued to provide diligence and other support throughout the entire process that helped the transaction close quickly. Catalyst also serves as the property manager.

Erik Tellefson, Managing Director, Medical Properties, for Capital One, arranged debt financing for the Mokena acquisition.

“Aside from being a part of our broader strategy targeting stabilized assets, the CMIS Mokena acquisition hits a home run for MedProperties and its investors for several reasons,” says MedProperties’ Managing Principal Roman Kupchynsky, “First, the CMIS already operated a highly profitable practice. But now, through its strategic partnership with SCA, it seems destined to become even more profitable. As the largest surgery center operator in the United States, SCA is a market leader that brings increased revenues and reduced costs thanks to its insurance contracts, economies of scale, supply chain economics (buying power) and other efficiencies, which should further improve the bottom line. SCA also has a strong track record for recruiting physicians. That all makes the CMIS a highly desirable tenant, which is a key part of what makes this an attractive investment for MedProperties.

“In addition, the CMIS enjoys other competitive advantages that were attractive to our firm,” Mr. Kupchynsky adds. “The recovery center’s overnight beds allow the CMIS to handle higher-acuity cases, and it is one of only seven of its kind licensed in Illinois, a state with a challenging Certificate of Need (CON) application process.”

CMIS Mokena is also located in an upscale community about 45 minutes southwest of Chicago, just south of U.S. Interstate Highway 80. It is a fast-growing, demographically attractive community that grew 28.5 percent from 2000 to 2010, and had a population of 19,416 as of July 1, 2015. Mokena also has a median household income of $100,151 – about double the national average. The area has also experienced a great deal of residential, retail and office development in recent years.

“It all adds up to an outstanding investment opportunity,” Mr. Freling concludes. “We are delighted to add CMIS Mokena to our growing portfolio of stabilized, core and core-plus healthcare real estate assets, and we plan to invest in many similar opportunities in the future.”

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.