DALLAS-After three years of researching the industry, Macfarlan Real Estate Investment Management has acquired its first piece of healthcare real estate in a bid to build a $100-million portfolio. The sweet spot is the specialty fund for off-market acquisitions is readily expandable.
"Our research has allowed us to penetrate relationships in the healthcare industry," Todd White, acquisitions partner for the Dallas-based Macfarlan, tells GlobeSt.com about the intense research into the best way to break into the field. "We almost didn't do it because it's so difficult to penetrate the healthcare industry and the financial banking industry that go along with it." The initial plan is to amass at least $100 million of real estate in three to five years.
Macfarlan's first acquisition is a 112,896-sf campus with a specialty hospital and three-story medical office building set on 12 acres at 3001-03 Bee Cave Rd. in the Rollingwood section of Austin. The investment group closed the off-market transaction after building ties with Hospital Partners of America of Charlotte, NC, which holds the master lease to the specialty surgery center. Macfarlan bought the campus for $24.3 million from a pair of Austin-area developers, Rollingwood TK 1.
White says the developers spent two years repositioning the five-year-old hospital, renovated in 2002, and marrying it to the adjacent 21-year-old office building, which was upgraded in 1998 and now holds eight medical-related tenants. Key to the layout is a cross-access agreement so it functions as one campus, the Surgical Hospital of Austin. HPA has 12 years left on its lease and the other tenants are tied to three- to seven-year leases--all newly signed, absolute net deals. "It's the perfect off-market deal," White says. "I was able to go in and snatch it quickly."
White says the time spent researching the industry has resulted in "many initiatives and alliance partnerships" to nurture off-market deals for private, for-profit healthcare assets. He can't discuss the specifics, but there is one more property under contract and three that he's chasing.
Though the industry logically follows Baby Boomers' trends, White says the acquisitions can be in markets other than retirees' favored hotspots. "We are not confined to one demographic profile that needs healthcare," he explains. The target markets, though, will be more affluent areas. The property focus is specialty hospitals or surgery centers, medical office buildings and long-term acute-care facilities. He adds locations and deal flow will be driven purely by Macfarlan's healthcare affiliates.
White stresses the new strategy is not a replacement but rather a supplement to Macfarlan's other investment product lines. "We're still investing in office, industrial and retail," he says. "It's just another asset class."
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