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A joint venture between Remedy Medical Properties and Kayne Anderson Real Estate has acquired a four-building medical office portfolio for $86 million.
Flagler Healthcare Investments sold the 181,000-square-foot property collection, which is spread over the areas of Phoenix, Chicago and South Florida. JLL Capital Markets represented the seller and procured the buyers.
Remedy Medical and Kayne Anderson have recently acquired another MOB asset in Chicago. In November, the longtime partners picked up RUSH Oak Brook Medical Center for $71 million.
The JLL team overseeing the most recent transaction was led by Senior Managing Director Mindy Berman, Director Matt DiCesare and Associate Liam Sorensen.
Diverse buildings, diverse practices
The four properties now under the joint venture’s ownership are located in Boynton Beach, Fla., Elgin, Ill., and Phoenix.
The Boynton properties are Health City I & II, two buildings that were completed in 2016. Located at 10275 and 10383 Hagen Road, the properties total nearly 35,000 square feet, according to CommercialEdge information. The same source shows that Health City I is primarily devoted to orthopedics, while Health City II, called the Boynton Pediatric & Dermatology Center, is leased to local practices of the same name. Flagler purchased both buildings in 2019.
READ ALSO: Medical Office Real Estate Trends to Watch in 2024
The buildings sit at the rim of Baptist Health City, a 133,000-square foot medical office complex owned by Invesco. Other neighbors include dermatology and rehabilitation facilities, located along Florida’s Turnpike, as well as Boynton Beach Boulevard.
The Elgin Professional Plaza, located at 750 Fletcher Drive in the Chicago submarket of the same name, is a 52,157-square-foot property that Flagler bought for $13.3 million in 2019, according to CommercialEdge information. Built in 2003, the property is currently leased to tenants with specialties in family practice; ophthalmology; ear, nose & throat; urology and medical imaging, in addition to housing dental and physical therapy practices. Also located in a small medical corridor, the Plaza is neighbored by another office building, as well as an outpatient care center.
The joint venture’s Phoenix purchase is Oasis Surgical Hospital, a facility devoted to orthopedic surgery and sports medicine. The property sits adjacent to Loop 202, giving it highway access to much of Maricopa County.
Medical offices stay good health
Like their relatives in life science, medical offices continue to perform strongly relative to an otherwise struggling office sector. Nevertheless, the sector is feeling the pain from high interest rates. In October 2023, a market update from Institutional Property Advisors indicated that transaction volumes nationwide fell by an average of 30 percent year-over-year through June, while sale prices slumped by 3 percent.
Adaptive reuse for medical offices has enjoyed a recent surge in popularity. Last month, NYU Langone Health opened a 260,000-square-foot ambulatory center in Garden City, N.Y., previously home to two department stores. That same week, EverGreen Health expanded to a 26,000-square-foot lease at the Woodlands Medical Plaza in Bothell, Wash, which was formerly an office building.
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