MIAMI-Behringer Harvard has acquired a portfolio of nine medical office buildings totaling more than 691,000 square feet across South Florida. The portfolio also includes 7.8 acres of undeveloped land adjacent to the Florida Medical Center in Fort Lauderdale. The financial terms of the deal were not disclosed.
Jason Mattox, chief administrative officer for Dallas-based Behringer Harvard, tells GlobeSt.com the portfolio was particularly attractive. That, he adds, is because of the assets’ immediate adjacency to destination acute care hospitals in an area of the country that has a demographic underpinning that has the potential to support the tenancy in these assets over the long term.
“Growth among the population utilizing health care services in this geographic area of the country is expected among researchers that follow the industry closely,” Mattox says. “Fort Lauderdale already has seen positive net absorption of medical office space during the first half of this year.”
The portfolio includes Gardens Medical Pavilion, a premier, five-story, class A property providing more than 75,000 square feet of medical office space in Palm Beach Gardens, and the Victor Farris Building, a nine-story, 148,000-plus-square-foot class A medical office property on the campus of Good Samaritan Medical Center in West Palm Beach.
Other buildings include the Palmetto Medical Plaza, an eight-story, 130,000-plus-square-foot medical office property on the campus of Palmetto General Hospital in Hialeah, the Hialeah Medical Plaza, a five-story, 72,000-plus-square-foot medical office building on the campus of Hialeah Hospital, and North Shore Medical Arts, a four-story, 56,000-plus-square-foot medical office property on the campus of North Shore Medical Center in Miami.
Behringer Harvard also acquired four medical office buildings at Florida Medical Center (FMC) in Fort Lauderdale: FMC Medical Mall, FMC North, FMC Central and FMC East. The FMC buildings provide more than 207,000 square feet of rentable space. Mattox says the goal is to enhance the value of the properties by driving up occupancy rates. Occupancy across the portfolio sat at 84 percent at the time of the acquisition. Behringer Harvard plans to invest more than $5 million in renovations and capital improvements to attract tenants.
“These properties are located in close proximity to hospitals and they become a destination in and of themselves,” Richard Schuchts, a senior vice president at Jones Lang LaSalle in Miami, tells GlobeSt.com. “Sellers are selling these properties because there are investors out there that see a growth market with good stability and a strong tenant mix and are willing to pay attractive prices.”
Behringer Harvard made this investment through a joint venture with AW Property Co., a commercial real estate firm with headquarters in Palm Beach Gardens that specializes in Florida markets. Earlier this month, Behringer Harvard acquired 100 percent ownership of eight properties in the portfolio. AW Property subsequently contributed a ninth building and a cash capital contribution to acquire an aggregate 10 percent joint venture interest in the portfolio. AW Property Co. will provide property management and leasing services for all buildings in the portfolio.
“Our joint venture partner contributes expertise about the local market as well as established relationships with tenants of the portfolio,” Mattox says. “Our contribution includes an extensive investment platform and a comprehensive infrastructure for asset management and a range of support services.”
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