John Dailey, senior vice president of investment services for Houston's PM Realty Group, tells GlobeSt.com that this was the optimum time to sell the building considering Koll Bren's finite hold period on acquisitions. Dailey arranged the sale. He's not talking selling price, but was advertised at $3.5 million and attracted eight bidders.
Dailey says the building was on the market for about four months before MedCap put it under contract. MedCap was formed in July 2000 to acquire 116 medical office buildings in 16 states, with concentrations in Texas, Tennessee and Florida, from HCA-The Healthcare Co., now a partner in the privately held real estate company.
Medap's latest acquisition is about 30 years old and 87% occupied by what Dailey terms as local physician offices. He says the building was attractive to medical real estate investors because of its proximity to the thriving Northwest Medical Center. PM Realty was the building's property manager for the last couple years.
Daily, echoing other industry professionals, says there are a lot of interested buyers in the Houston office market these days, but not that many motivated sellers. Too many sellers, he says, have "unrealistic" pricing expectations. "There are still a lot of moving parts with regard to getting an office building financed," he points out.
Dailey says many institutional investors have a limited scope with rigid expectations when it comes to formulating purchase decisions. He believes a few meaningful office building sales are needed to get the transaction pipeline flowing again. Despite the obvious roadblocks, Dailey is quick to point out that the market is not stagnant.
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