CHICAGO—Medical office buildings were popular with investors throughout the recession, and now that the worst of the economic trouble has receded, investors have begun snapping them up at an even greater pace. The 62,000-square-foot Crystal Lake Medical Arts Building at 360 Station Drive in Crystal Lake is the latest MOB to change hands. EnTrust Realty Advisors, LLC just arranged its sale from a group of physicians, which developed the property, to American Realty Capital Healthcare Trust, Inc., a publicly-registered REIT that owns a portfolio of healthcare office buildings.
“The seller was considering refinancing the property,” says James I. Clark, EnTrust's managing principal, but EnTrust helped them quickly “identify the right investor to enable them to quickly monetize their investment.” The building held many attractions. First, it was finished in 2008 and has the most modern design. Second, the Centegra Health System, which runs nearby hospitals and other facilities, anchors the northwestern suburban building, occupying over 50% of the space. In addition, its ten tenants occupy 93% of the space and the weighted average remaining term of the leases is seven years.
“Tenants tend to stick around [MOBs],” Clark adds, unlike most other properties where vacancies crop up “every time a lease rolls over.” For example, “one of the partners in the building is the head of radiology in the hospital,” and therefore, highly unlikely to leave.
This was a quick transaction.
“There is capital for healthcare real estate and buyers are aggressive,” Clark says. EnTrust began the process in early February and the deal closed near the beginning of this month. “It was not a widely brokered transaction,” since the idea was “to help [the physicians] monetize their asset on a direct basis without a long, drawn out marketing process.”
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
