HTA Spends $130M on Four Medical Properties in Q3

Healthcare Trust of America has had a busy third quarter. In August, the firm acquired four medical office properties totaling 469,000 square feet and a total investment of $130 million, the REIT announced as part of its most recent businesses update. Year-to-date, HTA has acquired 625,000 square feet in medical office properties totaling $183 million.

The acquisitions will help HTA increase its densification in key markets, according to the firm. The four properties are Houston Medical Center MOB, Twelve Oaks MOB in Houston, Clint Moore Medical Facility in Boca Raton and Austin Bluffs MOB in Colorado Spring, and they have an estimated year-one yield of 5.7%.

Houston Medical Center is a 127,000-square-foot facility located within the Texas Medical Center, the world’s largest medical complex totaling 50 million square feet and serving 10 million patients per year. Twelve Oaks MOB is a 140,000-square-foot facility near the Texas Medical Center on a campus with River Oaks Medical Center. Clint Moore Medical Facility is a 102,000-square-foot facility with 100% occupancy, and Austin Bluffs MOB is a 100,000-square-foot property near Denver.

Medical office activity has swelled following the pandemic. A recent report from Marcus & Millichap noted the asset class had strong fundamentals before the pandemic and the resiliency during the economic downturn and added that the rise in population aged 65 and older and a rise in elective procedures and routine appointments could increase the number of buyers of sub-$10 million on- and off-campus assets this year. It projects a 20 point rise in vacancy to 9.7% and an increase in newly built space should push the national asking rate 1.6% to an average of $21.85 per square foot.

In addition, research from Real Capital Analytics found that pricing has grown in the last five years. From Q1 2016 to Q1 2021, medical office cap rates averaged 20 basis points (bps) lower than suburban offices. However, in Q1 2021, that spread increased 25 bps, as medical office properties had a 6.5% cap rate across the US.

In addition to its medical office investments, HTA has also acquired 280,000 square feet of additional properties valued at more than $121 million.