ORANGE COUNTY, CA-Accretive Realty Investment LLC has sold three medical-office buildings in Orange County—two in Aliso Viejo and one in San Clemente—for an aggregate price of $41.4 million to an undisclosed private-equity fund in separate transactions. The properties were sold after Accretive completed repositioning programs that substantially boosted the value of each property.

The buildings were Oceanview Medical Center, a four-story, 30,931-square-foot medical-office building at 675 Camino de los Mares in San Clemente; Pacific Park Medical Dental, a 21,438-square-foot, three-story medical office building at 24541 Pacific Park Dr. in Aliso Viejo; and Aliso Viejo Medical Center, a 27,192-square-foot, three-story, class-A medical-office building at 24502 Pacific Park Dr. in Aliso Viejo, on which GlobeSt.com had previously reported.

Accretive had acquired Oceanview for $10.5 million in November 2012, when it was less than 80% leased. After moving some tenants out and relocated others between floors, it opened up a full floor for MemorialCare Health Foundation, which now occupies the first and second floors. The fully occupied property sold for $15.7 million at a cap rate of 5.3%.

Pacific Park was 90% occupied when Accretive acquired it for $6.5 million in November 2012. The firm invested additional capital over the past year to improve the common areas of the building and sold it $10.4 million at a cap rate of 5.25%.

As Globest.com had reported in November 2013, Accretive had purchased Aliso Viejo Medical Center for $7 million in August 2010 and completed a thorough, full-building renovation before selling it for $15.3 million. It also secured a lease renewal with its largest tenant, Kaiser Permanente, in mid-2013, with Newmark Grubb Knight Frank acting as leasing agent.

Garth Hogan and Todd Perman, executive managing directors with Newmark Grubb Knight Frank Global Healthcare Services, and Richard Bland, SVP with Cornish & Carey Commercial Newmark Knight Frank, represented Accretive in the transactions. Gary Naillon with Guggenheim Realty Group is the exclusive advisor for the buyer, which is also repositioning its portfolio.

According to Thomas LeBeau, CEO of Accretive, "Our strategy is to seek out value-add properties that can be effectively repositioned for the current demands of the medical-care community as well as appeal to the growth needs of the larger healthcare service providers. In this way, we can convert underperforming assets into well-positioned core-plus properties that are better suited to an investment portfolio."

Hogan comments that very low cap rates underscore the stability of the medical-office asset class and show there is far more capital chasing medical office than there is available supply. "Private capital is moving aggressively into this sector. And while Orange County is a high barrier-to-entry market, there are still opportunities in a number of underserved communities to reposition medical-office properties in a way that helps the healthcare providers gain greater exposure for their brand."

Bland adds that through capital improvements and strategic leasing with synergistic tenants, the three buildings in the transactions quickly reached their maximum potential. "This portfolio represented an opportunity to acquire a core set of buildings with a stable and reliable cash flow, further offering a diversified tenancy with staggered lease expirations. For a Northern California buyer, the proximal locations also ensure streamlined management with economies of scale."

Stay tuned to the Orange County page for an exclusive interview with Accretive Realty on repositioning medical-office buildings, what's entailed and the costs involved.