Meridian is building a strategy focused on medical office conversion projects with a goal of bringing more quality healthcare to a supply-constrained market. The healthcare investor and developer has acquired a two-story, 53,500-square-foot building in Orange County for $20.4 million, GlobeSt.com learns exclusively. Meridian plans to invest an additional $5 million into the building to properly transition it into medical office.
"Meridian identified the property on the first day it came to market and became involved in a competitive bidding situation with multiple other users and investors," R.J. Sommerdyke, VP of acquisitions at Meridian, tells GlobeSt.com. "Ultimately, we were able to win the deal by leveraging our reputation and track record, which gave the seller confidence in our ability to close quickly."
The project is exemplary of Meridian's current acquisition strategy. The property is 100% vacant and located on a 4.8-acre parcel adjacent to new retail and office developments. "I am excited about this project because it exemplifies Meridian's mission to deliver functional spaces in convenient locations that provide a fantastic patient experience, all while providing the user with a competitive cost of occupancy," says Sommerdyke. "We are thrilled to have already signed a major tenant in this project. The services they provide will enhance the lives of countless individuals and will be a major benefit to the entire community that it's serving, which aligns so well with Meridian's values."
As evidence of the strong demand, Meridian has already secured its first tenant, a large healthcare provider that will occupy half of the building. It is now marketing the second-floor space to medical office tenants.
While there is a lot of active capital in the space, there are fewer players focused medical office conversion. "At Meridian, for our investment business, we continue to focus on primary markets and look for the opportunities that others don't see," says John Pollock, CEO of Meridian, tells GlobeSt.com. "We believe our unique lens allows us to see opportunities that leverage our core competencies that include entitlement prowess, a seasoned project management bench, intense asset management and access to flexible capital."
Meridian is bullish on the healthcare market in the near term, and although there are some concerning economic indicators, the healthcare market remains healthy. "It is undeniable that we are late in the cycle; however, fundamentals—consumer confidence, low unemployment, wage growth, job openings—remain strong and there is inexpensive debt, which helps build momentum for real estate transactions," says Pollock.
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Kelsi Maree Borland
