MISHAWAKA, IN—A portfolio of medical office buildings hitting the market in Indiana, just outside of Chicago, could result in one of the most “significant” MOB portfolio transactions to occur in the Midwest in “quite some time.”

According to Erik Foster and Mike Wilson of the Chicago office of Toronto-based Avison Young, interest is strong from a variety of investor types, including national and international capital sources.

Perhaps the main reason for the strong interest, they say, is that Franciscan Alliance, a 13-hospital health system with a AA credit rating from Standard & Poor's, occupies about 90 percent of the space. Other independent physicians and groups occupy space as well, giving the portfolio a total occupancy of about 93 percent.

The brokers also note that Mishawaka, IN-based Franciscan, formerly the Sisters of St. Francis Health Services, has annual revenues of $2.4 billion and occupies 85 percent of the portfolio's space on long-term leases. The seller has not been disclosed; Wilson notes that it is not the health system.

As one of the largest Catholic-based health systems in the Midwest, Franciscan, whose market stretches from Greater Chicago down to Indianapolis, continues to expand with acquisitions of physician practices as well as new real estate developments. One of those new developments includes an MOB in the Northwest Indiana Portfolio that's set to open this month as part of an existing medical mall in Munster, just outside of Chicago.

In addition to the three buildings in the medical mall, the other buildings, all offering multiple specialties, are in the Indiana cities of Schererville, Dyer and Hammond—all of which are considered part of Greater Chicago. The MOB in Hammond is across the street from a hospital, the Franciscan St. Margaret Health–Hammond. The other buildings are in off-campus locations.

As far as the brokers are concerned, the portfolio offers stability with Franciscan as the long-term tenant, and it provides investors with an opportunity to take advantage of the paradigm shift in healthcare delivery brought on by the Patient Protection and Affordable Care Act (PPACA).

“This offering represents a microcosm of the new healthcare delivery model under the Affordable Care Act, with large systems expanding through acquiring top physician groups and pushing more multi-specialty care facilities off of the primary campus to ambulatory sites near the patient base,” says Mr. Wilson.

Other members of the Avison Young team marketing the portfolio are Phil Palmer, principal, and David Krasnoff, a debt specialist and senior VP.