Newmark orchestrates $35.2 million recap of MOBs to seed the partnership
By Murray W. Wolf
1814 Westchester Drive, High Point, N.C.
The Healthcare Capital Markets group of Newmark Group Inc. (Nasdaq: NMRK) has announced the recapitalization of medical outpatient buildings (MOBs) totaling nearly 116,000 square feet in Texas and North Carolina.
The two-asset recapitalization seeds a strategic joint venture (JV) between Bethesda, Md.-based Global Medical REIT Inc. (NYSE: GMRE) and an affiliate of Chicago-based Heitman LLC, a global real estate investment management firm.
Newmark announced the transaction in a news release distributed last Wednesday, March 19. The specifics of the recap were not disclosed, but RevistaMed data indicates that it was a roughly $35.2 million transaction involving one MOB in High Point, N.C., and another in Fort Worth, Texas.
The High Point property, the two-story, 97,811 square foot Cornerstone Westchester MOB at 1814 Westchester Drive, was recapitalized for slightly more than $28 million, or $286 per square foot (PSF). The Fort Worth asset, the one-story 18,084 square foot Texas Digestive Disease Consultants (TDDC) MOB at 9509 N. Beach St. was recapped for about $7.2 million.
Both transactions closed Dec. 20 but were not previously announced.
Vice Chairmen Jay Miele and John Nero, together with Vice Chairman Ben Appel and Senior Managing Director Michael Greeley of Newmark’s Healthcare Capital Markets group, in cooperation with local licensees, represented GMRE in the recapitalization and procured Heitman as a JV partner.
“GMRE’s experience and track record of achievements during its history attracted significant interest from the investment community, both existing investors and new entrants,” Mr. Miele said in the news release.
Mr. Nero added: “This partnership with Heitman validates GMRE’s acquisition and asset management platform.”
This is the first JV between the two firms
9509 N. Beach St., Fort Worth, Texas
Newmark executives tell HREI that the assets had been part of the GMRE portfolio, and this is the first JV between the net-lease medical real estate investment trust (REIT) and Heitman.
Newmark, which has sold several assets for GMRE during the past year or so – most recently properties in Oklahoma City and Panama City, Fla. – was hired by the REIT to identify a potential exit strategy for the assets, including either a sale or a recapitalization.
“The idea to align in a recapitalization and form a programmatic joint venture was attractive to GMRE, allowing them to continue to invest for the REIT’s balance sheet but now also through the joint venture,” Mr. Meile tells HREI. “The goals of GMRE aligned well with Heitman’s desire to continue investing in the medical outpatient sector alongside best-in-class owners and operators like GMRE.”
Newmark, which orchestrated a bidding process for the opportunity, worked on the transaction for about one year.
“These two Class A, single-tenant assets will serve as seed for a joint venture that is poised for growth through new acquisitions in the coming years,” Mr. Meile adds.
The new partners plan to build a portfolio
“We are pleased to announce a joint venture relationship with Heitman, a global real estate investment management firm with a long and successful track record of investing in the medical office sector for more than two decades,” GMRE Chief Investment Officer Alfonzo Leon said in last week’s news release. “Since 2016, GMRE has sourced and completed over 230 transactions to build a $1.5 billion portfolio with over 180 buildings, 400 tenants, and 4.7 million square feet across 34 states.
“We look forward to working together with Heitman to continue building a portfolio of high-quality medical outpatient facilities by leveraging our understanding of healthcare drivers, our relationships to source deals and our asset management strengths.”
Brian Pieracci, Head of Private Equity – North America for Heitman, said: “We are excited to partner with GMRE, one of the leading operators in the space.
“We believe the medical office sector is well-positioned due to the critical role it plays to deliver needs-based services,” Mr. Pieacci continued. “The aging U.S. population and the trend of increased services moving to outpatient settings is expected to provide tailwinds to support demand for services at the property level as well as within the sector.
“We believe the seed properties provide a compelling opportunity due to their current income and market-dominant tenancy. The portfolio also benefits from high-acuity uses and a diverse array of specialties.”
As an active investor in the MOB sector for more than 20 years, Heitman has acquired, developed and financed more than 250 assets with a gross asset value of more than $5 billion as of the end of 2024.
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