Launching a new venture today with the COVID-19 pandemic still spreading throughout the United States and the national economy sputtering? That seems risky. But it hasn’t stopped Midwest commercial real estate firms from launching new divisions, making major transactions and expanding their rosters. Business is still getting done today, even with the daily stream of bad news hitting the country.
Just look at the recent move by Minneapolis-based healthcare and real estate firm Davis. The company recently launched a new medical real estate investment fund with a series of 13 transactions totaling 536,362 square feet and $194 million in value.
Davis Medical Investors acquired eight medical office buildings totaling 309,735 square feet during the first two weeks of December for a total of $112 million. Three of the properties were sold into the fund from existing Davis-affiliated partnerships, while five were newly purchased from third parties.
“This is just the start of what we expect will be a fund of more than 20 medical office buildings totaling up to $240 million,” said Mark Davis, founder and managing partner of Davis.
And in 2021? Davis has big plans for the upcoming year. Mark Davis said the company plans to close $125 million of medical building acquisitions in 2021.
Stewart Davis, executive vice president of investments with Davis, said that the purchased facilities are good fit for the company in terms of their size, tenancy, occupancy levels and markets.
“These transactions are the culmination of many months of hard work,” Stewart Davis said. “Despite some of the acquisitions being temporarily put on hiatus because of COVID-19, we stayed in close contact with the sellers to ensure we successfully brought these deals to fruition.”
Davis’ newly acquired properties are in Minnesota, Tennessee, Ohio and Connecticut. This marks the first time Davis has acquired properties in either Tennessee or Connecticut. The portfolio is made up of Class-A and Class-B+ off-campus assets that have an average age of 10 years. The properties have an overall occupancy rate of 99 percent and a weighted average lease term of more than eight years.
The properties are:
• Hartmann MOB in Tennessee, 50,951 square feet, 93% leased
• Smyrna MOB, Tennessee, 37,566 square feet, 96% leased
• Crossings MOB, Tennessee, 38,852 square feet, 100% leased
• M Health-Fairview, Minnesota, 18,672 square feet, 100% leased
• Cornerstone MOB, Minnesota, 52,904 square feet, 100% leased
• Midwest ENT – Vadnais Heights, Minnesota, 12,000 square feet, 100% leased
• The Urology Group MOB, Ohio, 55,000 square feet, 100% leased
• EastPoint MOB, Connecticut, 43,790 square feet, 100% leased
The capital behind the new Davis Medical Investors Fund included long-time Davis partners as well as the participation of a strong Davis institutional partner. Capital One is providing the financing for the new fund.