Remedy, MedProperties Form $350M Joint Venture
The 23-asset MOB portfolio spanning 11 states has more than 1 million-square feet and is 94% occupied.
One of the largest owners of medical properties, Remedy Medical Properties, just got bigger.
It and MedProperties Realty Advisors have formed a $350 million-plus joint venture to recapitalize an 11-state, 23-asset healthcare real estate portfolio owned by MedProperties.
The portfolio, which includes primarily medical office buildings, totals more than 1 million square feet. The transaction closed Jan. 14.
The portfolio consists primarily of MOBs, but also includes some post-acute facilities such as a rehabilitation hospital and ambulatory surgery center in Texas, and a rehabilitation hospital in Ohio. Some of its well-known, investment grade healthcare tenants include Baylor Scott & White, Children’s Hospital of Los Angeles, CommonSpirit, Rady Children’s Hospital, U.S. Department of Veterans Affairs, University of Southern California, UF (University of Florida) Health and WVU (West Virginia University) Medicine.
For Chicago-based Remedy the joint venture enables the firm to acquire a majority interest in another high-quality portfolio that complements its already extensive holdings.
For Dallas-based MedProperties, a healthcare real estate private equity firm with assets in 23 states, the transaction enabled it to monetize some of its real estate holdings for its investors while retaining an ownership interest in the new venture, and continuing to serve as asset manager.
A Recapitalization Investment Opportunity
Darryl E. Freling, Managing Principal of MedProperties, said his company has aggregated a large number of healthcare real estate assets over the years through its various funds and investment partnerships.
In the fall 2020, the firm’s leadership decided to offer a portfolio of about two dozen of those properties as a recapitalization investment opportunity rather than an outright sale. The offering was taken to market in early 2021, and Remedy emerged as the chosen joint venture partner in the summer of that year.
A transaction involving almost two-dozen properties owned by six different selling entities had its complexities, Joe Magliochetti, Chief Investment Officer for Remedy, notes in prepared remarks, “but we worked through them together, and it couldn’t have been better. Hopefully this joint venture will lead to more opportunities together in the future.”
Although Remedy has been a pioneer in making recapitalization investments with other private equity healthcare real estate investors, this was the first time the firm had done this type of transaction of this size and with a private equity firm that was also another operator and a competitor. The deal was also a first for MedProperties.
Properties Located in Top Metro Areas
The properties are located in some of the top metropolitan markets in the country, as well as in strategic secondary markets. In aggregate, the properties are 94 percent occupied and 71 percent leased by high-caliber, leading hospitals, health systems and other investment grade tenants.
The properties are located in the following states: Texas (eight facilities), Pennsylvania (two), Florida (two), Ohio (two), Kentucky (two), California (one), Indiana (one), West Virginia (one), Tennessee (one), New York (one), North Carolina (one) and Missouri (one).
Capital One provided senior debt for the transaction, and the CBRE Healthcare & Life Sciences Capital Markets team marketed the portfolio.