Savlan Capital Plans to Invest $100M in Single-Tenant Medical Offices This Year

Savlan Capital has acquired a 5,125 square-foot outpatient medical office in Norman, Oklahoma, for $1.75 million.

The property, which is occupied by Direct Orthopedic Care, was built in 1983 and renovated in 2018. Savlan’s CEO Zusha Tenenbaum tells GlobeSt.com that the property was attractive because of its location in a college town and the strength of DOC.

“The business model appealed to me, and the city has great demographics and economics,” Tenenbaum tells GlobeSt.com.

With the acquisition, Savlan Capital has now purchased six single-tenant medical office buildings for $13.4 million after establishing an investment fund focused on acquiring single-tenant health care buildings throughout the US. The investments offered cap rates ranging between 7 to 8.5%.

Savlan Capital anticipates investing approximately $100 million in this asset class in 2021. Currently, the company has eight additional properties under contract. It plans to close on a significant number of deals in the third quarter.

Traditionally, Savlan has focused on multifamily, flex, and office. While it will continue to own properties in these sectors, Savlan’s CEO Zusha Tenenbaum thinks single-tenant health care facilities provide a buffer against e-commerce and recessions.

“As the pandemic was developing, we saw the value of having medical tenants for being e-commerce proof, recession-proof and pandemic-proof,” Tenenbaum says. 

With the medical office acquisitions, Savlan is also expanding from a regional to a national footprint. “The motivation is to diversify and not have all properties in one geographic location,” Tenenbaum says.

Outside of the Oklahoma deal, Savlan has made purchases in Texas, New Mexico, Florida, Oklahoma, Ohio, and Alabama. In April, it acquired a 4,634-square-foot building in Sarasota, Florida, occupied by Southern Veterinary Partners for $2.4 million. Also, in April, it purchased a 6,787-square foot facility in Columbus, Ohio, fully leased to Cincinnati-based Brightview Health for $1.46 million.

In March, it bought a 3,373-square-foot building in Brewton, Alabama, occupied by MainStreet Family for $1.32 million. Also, in March, it purchased a 10,698-square foot medical office in Victoria, Texas, leased to NextCare Urgent Care for $3.27 million. It made one other purchase that month, buying a 14,843-square-foot freestanding medical office in Carlsbad, New Mexico, building leased to Carlsbad Medical Center for $3.2 million.

Tenenbaum says he prefers single-tenant assets because he doesn’t have to get involved in managing the asset. Single-use also makes it easier for the company to remain diversified.

“We know what we’re getting into,” he says. “If you have a dialysis [center], you check the market that there is a need for dialysis and that it’s not oversupplied.”