P R E S S R E L E A S E
Plans Aggressive Marketing/Leasing Effort For Prominent Well-Located Buildings
LIBERTYVILLE, IL (November 27, 2023)—An affiliate of Stage Equity Partners LLC has acquired the two-building, 91,818-square-foot Hollister Medical Office Portfolio in north suburban Libertyville from Hollister Incorporated, an international medical supply manufacturer, which has its corporate headquarters in an adjacent 300,000-square-foot building. Stage Equity acquired the properties in an off-market transaction.
The Hollister Medical Office Portfolio consists of the three-story, 57,585-square-foot building at 1800 Hollister Drive and the three-story, 34,233-square-foot building at 1900 Hollister Drive. The 1900 building, on 5.1 acres, originally was developed in 1980 (redeveloped in 2019) and the 1800 building, on 7.9 acres, in 1999. The total parking count for the two-building portfolio is 411 spaces which includes 15 ADA compliant spaces and offers a parking ratio of more than 4 spaces per 1,000 square feet leased.
The medical office portfolio has many attractive attributes, including its proximity to Advocate Condell Medical Center in Libertyville and Northwestern Lake Forest Hospital as well as its location in a demographically rich market that includes the newly redeveloped Hawthorn Mall and the thriving Melody Farm Lifestyle Center.
At the time of acquisition, the buildings had a combined occupancy of approximately 80%. Significant tenants of the building include Advocate Medical Group, UroPartners, Weil Foot & Ankle, Northwest Neurology, Lake Forest Internal Medicine, Pediatrust, Illinois Retina Associates, and other multi-location regional physician and dental practices.
“This is a tremendous opportunity to acquire an established and well-known Class A medical office portfolio from their original owner,” said Brian Howard, President, Stage Equity Partners. “It is rare to find such quality buildings on over 13 acres in a tremendous retail corridor. Historically, because of its great location, the buildings have been maintained at a high occupancy rate. We’ll immediately begin executing a business plan that will help return occupancy to those levels.”
One of the unique advantages of some medical office space is the general longevity of tenants. Many medical space users have expensive and heavy equipment that is costly and challenging to move, as well as a dedicated patient base connected to the location. As a result, many medical businesses become long-term tenants of a building.
In conjunction with the portfolio acquisition, Stage Equity has named Jason Werth and Tabitha Dozier of NAI Hiffman as exclusive leasing agents. Stage Equity conservatively modeled increasing overall occupancy to approximately 95% in three years, which the firm reasonably anticipates will occur much earlier.
Howard believes that a dedicated leasing team with experience in medical office properties will be a significant asset in identifying, attracting and securing a synergistic tenancy that could include new medical practices such as women’s health, orthopedic, cardiovascular, imaging and gastro, among others. Werth and Dozier are also the exclusive leasing agents at Stage Equity’s highly successful 50,000-square-foot multi-tenant medical office buildings located at 901 Biesterfield in Elk Grove Village.
Among the common attributes of the Elk Grove building and the Hollister medical portfolio include:
• off-market acquisition from original, long-term owners,
• location in proximity to large regional hospitals with affluent area demographics,
• location within a popular and thriving retail corridor,
• many long-term tenants with significant capital expended in suite buildout/equipment, and
• acquisition at low basis, to retain and attract top tenants at competitive rental packages.
Howard said that over the last several years, as the market continued to evolve with the rapid rise in interest rates, Stage Equity sold a number of assets and evaluated numerous potential acquisitions.
“With interest rates moving 300 basis points higher, pricing hasn’t fully adjusted which has created a challenging environment to structure deals that achieve targeted yields,” Howard said. “This two-building portfolio, however, is a special opportunity and tremendous real estate that can provide a steady income stream, together with strong upside potential.”
The two-building portfolio had been under contract approximately eighteen months ago, but the rapidly rising interest rate environment that has caused an overall slowdown of acquisitions and disposition halted the progress of the sale transaction and ultimately created the opportunity for Stage Equity.
The area surrounding the portfolio is a demographically rich market, highlighted by Hawthorn Mall, a regional mall that is undergoing a $300 million renovation and redevelopment plan that will include 550 new apartments, and Melody Farm Lifestyle Center, a 275,000-square-foot center that also features 250 residential units. Additionally, the portfolio is located within 1.5 miles of Advocate Condell Medical Center in Libertyville and within 4 miles of Northwestern Lake Forest Hospital.
The properties are located across the street from Hawthorn Mall mixed use redevelopment (undergoing $300M renovation including open air retail, grocery center and 550+ residential units) and immediately north of thriving Mellody Farm lifestyle center (275,000 square feet and 250 luxury apartments)
Gina Lollio of Cushman & Wakefield represented Hollister Incorporated in the transaction. Wintrust Bank provided the financing for Stage Equity.
About Stage Equity Partners, LLC
Stage Equity Partners LLC is a Chicago-based private real estate investment firm focused on healthcare assets. The firm acquires, develops and manages high quality medical office buildings and healthcare facilities across the country. Stage has acquired more than 45 buildings in nine states, for its own account and for investor partners. Stage’s focus is on select medical acquisitions in strong, established demographic areas in close proximity to dominant hospital systems or other significant demand drivers. Targeted acquisitions typically range from $5MM to $25MM range where there is less competition from REITs and institutional investors, which creates yield premiums and additional opportunities for its investors and itself.
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