CHICAGO—The Affordable Care Act has been in the news a lot lately, but beyond the debate over enrollment numbers, most observers believe it has made medical office buildings even more appealing and fortified a long-term trend.
“The number of investors in the space has doubled or even tripled,” Jay Miele, managing director of Hammond Hanlon Camp LLC, tells GlobeSt.com. The firm advises healthcare organizations throughout the US, and recently helped Boldt Holdings LLC recapitalize the 95,043-square-foot medical office building attached to 353-bed Advocate Sherman Hospital in suburban Elgin. Boldt completed the facility in 2010, and owned it along with physician investors.
According to Kane County property records, Chicago-based Harrison Street Real Estate Capital LLC paid $33.6 million for the building. The transaction closed on December 31, 2013. The firm, one of the country's largest investors in needs-based real estate such as medical buildings, student housing, senior housing and storage properties, will now have a roughly 95% stake.
“From the perspective of the hospital, nothing changes,” Miele says. The Appleton, WI-based Boldt will remain the day-to-day manager of the building, which is fully-leased to the hospital and other third-party physicians. “They remain committed to the property,” but the developer, part of the Boldt Company, a national construction services firm, can now use the capital “and put that into future projects that they're doing.”
"The interest in the property was extremely high,” Miele adds. This was partly due to its location in a top market like Chicago, and also because “this hospital is clearly the newest in the area and also benefits from its ownership under Advocate.” Furthermore, Boldt scheduled the leases so the new owners won't take a big hit in any one year.
The decision to recapitalize the property from a company like Boldt could be another indication of the increasing interest from investors in top-of-the-line medical product.
“This was new for them,” says Miele. “They don't do this as a matter of course.” However, he expects the company will hold onto its other properties even as it keeps the recapitalization option in mind. “They see value in owning a large portfolio.”
Recently, GlobeSt.com reported that Harrison had closed a $100 million co-invest fund that it will invest alongside its fourth opportunistic fund, for which it raised $750 million in equity capital last year. Since it was founded in 2006, Harrison Street has raised more than $4.5 billion in discretionary equity capital.
Continue Reading for Free
Register and gain access to:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
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.
