SAN ANTONIO—Demonstrating the need for medical facilities amid an aging population and the notion that healthcare is somewhat separate from leading indices and investment decisions, medical office buildings continue to be popular with investors. One such example is a portfolio of four on-campus medical office buildings totaling 423,411 square feet. The portfolio has been acquired by MLL Capital, a Boston-based commercial real estate investor focused on medical office, laboratory and life sciences properties across the country. Terms of the deal were not disclosed.
“Healthcare real estate is a counter-cyclical investment opportunity, offering some of the best risk-adjusted returns at this point in the economic cycle,” said Kyle O'Connor, president and founder, MLL Capital. “This acquisition is representative of our strategy of focusing on opportunistic and value-add investments in this sector, and repositioning them to attract and retain high-quality tenants.”
MLL Capital plans to invest approximately $27 million into renovating and leasing the portfolio with the goal of creating a high-quality medical office environment capable of supporting the clinical needs of world class medical professionals and serving the area's growing patient population and strong demand for outpatient services.
The four well-located properties within San Antonio and the South Texas medical community are each directly connected to a hospital owned by a health system. The campus is anchored by a broad integrated network of community-based services and partners, and is affiliated with the Baylor College of Medicine and Texas Children's Hospital.
Two of the buildings are located on the newly renovated campus of Children's Hospital of San Antonio, a freestanding hospital 100% dedicated to children's healthcare, owned by Christus Healthcare. The other two are located on the Christus Santa Rosa Hospital Medical Center campus, located within the 900-acre South Texas Medical Center, an expansive medical destination that consists of 45 related institutions, including 12 hospitals. It is the largest medical research, education and healthcare provider in the region.
“While many investors are still targeting core properties, we believe that acquiring value-add properties in the medical office sector and repositioning them offers a strong alternative allocation to achieve stabilized yields, presenting a great investment opportunity,” O'Connor said.
MLL Capital partnered with Akerman & Co., a full-service commercial real estate firm based in Atlanta to form a joint venture with Artemis Real Estate Partners, a multi-strategy real estate investor, to purchase the portfolio. MLL Capital will serve as the asset manager to execute the business plan for the investment. Ackerman will serve as property manager and construction manager.
“This opportunity perfectly fit our strategy of focusing on opportunistic and value-add investments in medical office, lab and life sciences properties that require substantial capital improvements,” O'Connor tells GlobeSt.com. “We're confident that we can reposition the portfolio and drive occupancy by leasing to tenants attracted by the renovations, the location of the properties and the affiliation with Christus Health, The Children's Hospital of San Antonio, Baylor Clinic and Texas Children's Hospital.”
SAN ANTONIO—Demonstrating the need for medical facilities amid an aging population and the notion that healthcare is somewhat separate from leading indices and investment decisions, medical office buildings continue to be popular with investors. One such example is a portfolio of four on-campus medical office buildings totaling 423,411 square feet. The portfolio has been acquired by MLL Capital, a Boston-based commercial real estate investor focused on medical office, laboratory and life sciences properties across the country. Terms of the deal were not disclosed.
“Healthcare real estate is a counter-cyclical investment opportunity, offering some of the best risk-adjusted returns at this point in the economic cycle,” said Kyle O'Connor, president and founder, MLL Capital. “This acquisition is representative of our strategy of focusing on opportunistic and value-add investments in this sector, and repositioning them to attract and retain high-quality tenants.”
MLL Capital plans to invest approximately $27 million into renovating and leasing the portfolio with the goal of creating a high-quality medical office environment capable of supporting the clinical needs of world class medical professionals and serving the area's growing patient population and strong demand for outpatient services.
The four well-located properties within San Antonio and the South Texas medical community are each directly connected to a hospital owned by a health system. The campus is anchored by a broad integrated network of community-based services and partners, and is affiliated with the Baylor College of Medicine and Texas Children's Hospital.
Two of the buildings are located on the newly renovated campus of Children's Hospital of San Antonio, a freestanding hospital 100% dedicated to children's healthcare, owned by Christus Healthcare. The other two are located on the Christus Santa Rosa Hospital Medical Center campus, located within the 900-acre South Texas Medical Center, an expansive medical destination that consists of 45 related institutions, including 12 hospitals. It is the largest medical research, education and healthcare provider in the region.
“While many investors are still targeting core properties, we believe that acquiring value-add properties in the medical office sector and repositioning them offers a strong alternative allocation to achieve stabilized yields, presenting a great investment opportunity,” O'Connor said.
MLL Capital partnered with Akerman & Co., a full-service commercial real estate firm based in Atlanta to form a joint venture with Artemis Real Estate Partners, a multi-strategy real estate investor, to purchase the portfolio. MLL Capital will serve as the asset manager to execute the business plan for the investment. Ackerman will serve as property manager and construction manager.
“This opportunity perfectly fit our strategy of focusing on opportunistic and value-add investments in medical office, lab and life sciences properties that require substantial capital improvements,” O'Connor tells GlobeSt.com. “We're confident that we can reposition the portfolio and drive occupancy by leasing to tenants attracted by the renovations, the location of the properties and the affiliation with Christus Health, The Children's Hospital of San Antonio, Baylor Clinic and Texas Children's Hospital.”
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Lisa Brown
Lisa Brown is an editor for the south and west regions of GlobeSt.com. She has 25-plus years of real estate experience, with a regional PR role at Grubb & Ellis and a national communications position at MMI. Brown also spent 10 years as executive director at NAIOP San Francisco Bay Area chapter, where she led the organization to achieving its first national award honors and recognition on Capitol Hill. She has written extensively on commercial real estate topics and edited numerous pieces on the subject.
