Dallas-based MedProperties Realty Advisors LLC, a real estate private equity firm, has recently acquired three medical office buildings in Texas. They include a two-story, 40,000-square foot medical complex in Lakeway via a joint venture with Equity LLC, an Ohio-based developer, owner and operator of healthcare facilities and other real estate assets; and a 27,554-square foot medical office building in Dripping Springs. No financial terms were disclosed.
AUSTIN and DALLAS, Texas, Aug. 15, 2018 – MedProperties Realty Advisors LLC has strengthened its commitment to the strong, growing Austin market and expanded its presence in the area by investing in three more medical office buildings (MOBs) there.
Together with the February 2018 acquisition of the 32,987 square foot Lakeside Professional Building in the Austin suburb of Bastrop, the three additional recent acquisitions bring its holdings in the area to four MOBs totaling more than 120,000 square feet.
MedProperties, a national real estate private equity firm headquartered in Dallas, closed in June on the ground-up development of a two-story, 40,000 square foot medical complex in Lakeway, about 21 miles northwest of Austin. The transaction is a joint venture with Equity LLC, an Ohio-based developer, owner and operator of healthcare facilities and other real estate assets with 10 regional offices including in Austin and San Antonio. Slated for completion in April 2019, the Lakeway Medical Village MOB is the fifth joint venture project between the two firms.
In addition, MedProperties simultaneously closed in late-July on the acquisitions of two, newly developed MOBs. They included a 27,554 square foot MOB in Dripping Springs, about 23 miles west of Austin, and a 20,167 square foot MOB in Round Rock, about 19 miles north of Austin.
Why the growing commitment to the Austin area?
“Austin is a desirable market that is dominated by strong healthcare systems such as Seton Healthcare Family, St. David’s Healthcare and a growing presence of Baylor Scott & White, one of the largest health systems in the country,” MedProperties Managing Principal Darryl Freling notes. “With our acquisition in Bastrop and the three recent acquisitions, we’ve obtained the critical mass needed for a nice-sized portfolio in the Austin area.”
Mr. Freling also pointed out the attractive location.
“These acquisitions are located in the Austin metroplex, one of the fastest growing areas of the country,” he says. “In addition, the Lakeway medical complex will be built on a 2.84-acre tract across the street from Baylor Scott & White’s highly visible, prominent Lakeway medical center campus.”
He noted that U.S. News & World Report named Austin the #1 place to live in the United State for 2017 and 2018, and that the 2016 median household income in the area was $71,000, $13,383 greater than the U.S. median household income. Austin is also the state capital, the 11th largest city in the United States and the home of the flagship campus of the University of Texas system. It also boasts a popular, lively music scene and has seen a rapid influx of technology companies.
MedProperties also closed in mid-July on the acquisitions of two existing properties in the Austin area.
MedProperties Managing Principal Roman J. Kupchynsky II says that another benefit of the Austin area acquisitions were the favorable purchase prices. He says that MedProperties acquired the Round Rock and Dripping Springs properties on an off-market basis at what the firm’s officials believe to attractive prices. Mr. Kupchynsky says the three acquisitions also have strong tenancy.
Equity LLC’s SVP, Lee Jackson adds, “The Lakeway medical office building had significant pre-leasing prior to closing, with a number of the physician practices also investing in the real estate development. We started with some of the best physician groups in Austin (Premier Family Physicians, Texas Orthopedics, and Urology Austin) and built on this solid foundation to create a synergistic mix of physicians and services, and a one-stop shop for patients. The location next to Lakeway-Baylor Scott & White Medical Center is second to none, and will provide the property a competitive advantage over other medical office buildings in the area.”
The firm acquired a 27,554 square foot medical office building (MOB) in Dripping Springs (top) and a 20,167 square foot MOB in Round Rock (bottom).
Regarding the two acquisitions, Mr. Kupchynsky added, “The Dripping Springs MOB is 100 percent leased by a strong, diverse mix of tenants with a weighted average lease term of 10 years, and the Round Rock facility is 93 percent leased by a variety of high-quality tenants with an average lease term of nine years. In addition, two of the tenants in the Round Rock MOB invested in the real estate through a joint venture with MedProperties, thereby benefiting the property and the tenants. But because of the facilities’ ideal locations and many amenities and benefits, we believe they will generate attractive, risk-adjusted value-add returns.”
The Dripping Springs MOB’s tenants include orthodontics, neurology, urology, pain management, diagnostic imaging and gastroenterology services.
Tenants at the Round Rock facility include plastic surgery, minimally invasive surgery, dental and primary care services. The three properties were added to the MedProperties Investment Partners LP Fund (Fund II). With these transactions, MedProperties has now completed its capital deployment for Fund II. MedProperties recently launched its third fund, MedProperties Fund III, and has already closed two investments into that fund.
Erik Tellefson, Managing Director of Capital One Healthcare, arranged debt financing for the Dripping Springs and Round Rock acquisitions. Debt for the Lakeway project’s development costs is being provided by Security State Bank & Trust, and architectural design is provided by BSA LifeStructures.
MedProperties is a Dallas, Texas based healthcare real estate private equity firm that invests on a direct and an indirect basis (through joint venture relationships) in the development of new, value-add, and stabilized healthcare real estate, including multitenant medical office buildings and single-tenant, specialty healthcare facilities throughout the U.S. MedProperties invests through its discretionary funds, and through stand-alone investment vehicles. MedProperties is dedicated solely to investments in healthcare real estate. For further information on MedProperties, please visit www.medpropertieslp.com.
About Equity LLC
Equity LLC is a national commercial real estate company that provides real estate development, leasing, construction, and property management services for healthcare, retail, office, mixed-use, and seniors housing projects in the United States. It also offers full-service 3rd party brokerage, property management, and consulting services for most real estate product types, including office, medical office, senior living, retail, industrial, self-storage, and residential. The private company was founded in 1989 by Steve Wathen and is based in Columbus, Ohio. It also has locations in Cincinnati and Dayton, Ohio; Austin and San Antonio, Texas; Charleston, S.C.; and Tampa, Naples, Orlando and Ft. Lauderdale, Florida. For additional information, please visit www.equity.net.