Return Rate Increases During Four-Year Hold Period

HOUSTON—In 2012, Chicago-based real estate private equity firm, Origin, with its Transwestern operating partner, acquired the defaulted note for Kingwood Medical Arts from Canadian Imperial Bankof Commerce at a discount, and nine months later, acquired the property through a bankruptcy trustee sale. Prior to the acquisition, Origin and Transwestern reinstated a 15,000-square-foot lease to a physician group that previously vacated the property due to a dispute with the original owner. This resulted in an immediate 15% increase in the occupancy of the property located at 300–350 Kingwood Medical Dr.

Once the property was acquired, the partnership retained Transwestern to provide leasing and management services. Carter and Brandy Bellow Spinks executed new leases to nearly double occupancy, from 52.5% to 90%. During the time of Origin's ownership, net operating income increased an average of 5.8% annually.

The 90,000-square-foot medical office building recently sold for an undisclosed price, although it represented a 62% increase in value. With the value created through the four-year hold, Origin generated a 25.4% internal rate of return and a 2.5 multiple in its investment. The building was acquired by a multi-billion dollar healthcare REIT. 

Transwestern's Eric Johnson, national director of healthcare advisory services, and Scott Carter, vice president, represented Origin in the sale. Transwestern has been retained by the new ownership to continue providing leasing and management services.

“The acquisition, management and disposition of Kingwood Medical Arts clearly demonstrates Origin's fundamental strategy to purchase well-located assets with fixable problems, create and enhance value for the asset, and exit the transformed asset,” said Marc Turner, managing director of investment management, Origin Investments.

The property is anchored by a 30,000-square-foot surgical center operated by a venture between Memorial Hermann Health System and United Surgical Partners. The property is adjacent to the HCA Kingwood Medical Center campus, which includes a 375-bed general acute care hospital.

“This was a great project from the very beginning,” said Carter. “We worked closely with Origin from initial underwriting to final execution of the marketing plan to fulfill their investment objectives. All the hard work paid off, as the value we created aligned perfectly with the current appetite of the medical office building investment market.”

GlobeSt.com learns that Kingwood is a 14,000-acre master planned community located about 23 miles north of downtown Houston, just off of US 59. Kingwood, also known as the livable forest, was created by the Friendswood Development Company in 1971 and has grown rapidly since. The new community was named “Kingwood” after King Ranch, one of the original developers before being bought by the Friendswood Development Company.

Kingwood is divided into 21 planned villages, each with a separate village association, distinct style and varying home prices. In 1996, Kingwood was annexed by the city of Houston.

Kingwood's heavily wooded acreage is canopied with tall pines and magnolias, along with 20 other types of shade trees. The community has a variety of wildlife including deer, fish and birds that can be found in the 500-plus acres of private nature preserves and parks. More than 75 miles of hike and bike trails in the greenbelt run through Kingwood's naturally beautiful woods and lakes.

Kingwood is also a thriving commercial center, with notable retail, shopping and dining venues calling Kingwood home, near the front of Kingwood Drive and in Kingwood's Town Center off of Lake Houston Parkway. In addition, Kingwood is only 3 miles north of Deerbrook Mall and Humble, TX's commercial centers. Deerwood Club and the Kingwood Country Club provide challenging golf courses.

As previously reported, Origin recently purchased AMLI @ the Medical Center.

HOUSTON—In 2012, Chicago-based real estate private equity firm, Origin, with its Transwestern operating partner, acquired the defaulted note for Kingwood Medical Arts from Canadian Imperial Bankof Commerce at a discount, and nine months later, acquired the property through a bankruptcy trustee sale. Prior to the acquisition, Origin and Transwestern reinstated a 15,000-square-foot lease to a physician group that previously vacated the property due to a dispute with the original owner. This resulted in an immediate 15% increase in the occupancy of the property located at 300–350 Kingwood Medical Dr.

Once the property was acquired, the partnership retained Transwestern to provide leasing and management services. Carter and Brandy Bellow Spinks executed new leases to nearly double occupancy, from 52.5% to 90%. During the time of Origin's ownership, net operating income increased an average of 5.8% annually.

The 90,000-square-foot medical office building recently sold for an undisclosed price, although it represented a 62% increase in value. With the value created through the four-year hold, Origin generated a 25.4% internal rate of return and a 2.5 multiple in its investment. The building was acquired by a multi-billion dollar healthcare REIT. 

Transwestern's Eric Johnson, national director of healthcare advisory services, and Scott Carter, vice president, represented Origin in the sale. Transwestern has been retained by the new ownership to continue providing leasing and management services.

“The acquisition, management and disposition of Kingwood Medical Arts clearly demonstrates Origin's fundamental strategy to purchase well-located assets with fixable problems, create and enhance value for the asset, and exit the transformed asset,” said Marc Turner, managing director of investment management, Origin Investments.

The property is anchored by a 30,000-square-foot surgical center operated by a venture between Memorial Hermann Health System and United Surgical Partners. The property is adjacent to the HCA Kingwood Medical Center campus, which includes a 375-bed general acute care hospital.

“This was a great project from the very beginning,” said Carter. “We worked closely with Origin from initial underwriting to final execution of the marketing plan to fulfill their investment objectives. All the hard work paid off, as the value we created aligned perfectly with the current appetite of the medical office building investment market.”

GlobeSt.com learns that Kingwood is a 14,000-acre master planned community located about 23 miles north of downtown Houston, just off of US 59. Kingwood, also known as the livable forest, was created by the Friendswood Development Company in 1971 and has grown rapidly since. The new community was named “Kingwood” after King Ranch, one of the original developers before being bought by the Friendswood Development Company.

Kingwood is divided into 21 planned villages, each with a separate village association, distinct style and varying home prices. In 1996, Kingwood was annexed by the city of Houston.

Kingwood's heavily wooded acreage is canopied with tall pines and magnolias, along with 20 other types of shade trees. The community has a variety of wildlife including deer, fish and birds that can be found in the 500-plus acres of private nature preserves and parks. More than 75 miles of hike and bike trails in the greenbelt run through Kingwood's naturally beautiful woods and lakes.

Kingwood is also a thriving commercial center, with notable retail, shopping and dining venues calling Kingwood home, near the front of Kingwood Drive and in Kingwood's Town Center off of Lake Houston Parkway. In addition, Kingwood is only 3 miles north of Deerbrook Mall and Humble, TX's commercial centers. Deerwood Club and the Kingwood Country Club provide challenging golf courses.

As previously reported, Origin recently purchased AMLI @ the Medical Center.