BridgeInvest, a lender based in Miami, has originated $36 million of construction financing to fund the development of a mixed-use commercial building in Aventura, Fla.

The property, dubbed Ivory 214 by its builder, Rieber Developments, will add nearly 40,000 square feet of medical office space and 11,000 square feet of retail in the Atlantic coast city, about halfway between Miami and Fort Lauderdale. It will also include a 100-room hotel operated under Hilton‘s Tapestry Collection brand.

The loan refinances prior debt that was provided by the same lender in 2017 for Rieber’s acquisition of the land, according to Alex Horn, one of BridgeInvest’s founders.

“We’ve had the opportunity to work with the borrower for an extended period of time,” Horn said. “They’re very capable of building this project, so we liked the idea of financing the construction.”

The ten-story medical building, which broke ground just over a year ago, is subdivided into office condominiums that Rieber is selling to health-care providers. Though the property won’t be open for business until early 2020, 30 out of 34 office condos have already been sold, the company said.

Meanwhile, the Tapestry hotel will cater towards extended-stay customers, with each room featuring a small kitchen. There will also be a pool, a fitness center, meeting space and a rooftop terrace, with the property operated by Driftwood Hospitality Management.

“Securing the construction financing for Ivory 214 is an especially proud moment and a key step in delivering this compelling project to Aventura,” Bernardo Rieber, a principal at Rieber Developments, said in a statement. “Today’s closing is an endorsement of the continued strength and market appeal of Ivory 214 as we continue our forward momentum.”

The development, at 2820 Northeast 214th Street, will stand a few blocks from Aventura Hospital & Medical Center, a for-profit hospital run by HCA Healthcare. Rieber is also working on a neighboring project, 1212 Aventura, which will likewise include office and retail components but will feature a senior-living complex instead of a hotel.

The South Florida city of just under 40,000 residents is notable to commercial real estate cognoscenti as the home of the Aventura Mall, America’s third-largest shopping center. Last year, Aventura Mall, which is co-owned by Turnberry Associates and Simon Property Group, pulled in one of the biggest retail debt deals in the country, a $1.75 billion single-asset CMBS loan from J.P. Morgan Chase, Deutsche Bank, Morgan Stanley and Wells Fargo.

Source: Commercial Observer

Medical office buildings (MOBs) were trading at steady increases year over year from 2011 to 2017, says P.J. Camp, principal and co-founder of Atlanta-based healthcare real estate investment firm Hammond Hanlon Camp. In 2018, however, MOB transactions started to dip, a trend that bled into the first part of this year.

There were $14 billion worth of MOB transactions in 2017 but $12 billion worth in 2018. The first quarter of 2019 saw $1.7 billion worth of transactions in the sector, down 32 percent from the first quarter of 2018 and the lowest quarterly total in five years, says Camp.

Camp was a participant on the investment panel at the ninth annual InterFace Healthcare Real Estate Carolinas conference. The half-day information and networking event was held May 30 in Charlotte and was hosted by Southeast Real Estate Business and Seniors Housing Business.

Also participating in the panel were Mervyn Alphonso, senior vice president of Anchor Health Properties; Steven Reedy, managing director of CIT Healthcare Finance; Stephen Pandos, director of finance at Insite Properties; Gerald Quattlebaum, senior vice president of Flagship Healthcare Properties; Jim McMahon, senior director at Capital One Healthcare; and moderator Andy Lawler, healthcare development partner at The Keith Corp.

Camp said the Southeastern United States is faring better than its counterparts around the country when looking at the transactional volume of MOBs. The first quarter of 2019 saw $413 million worth of transactions, which represents nearly a quarter of the total U.S. deal volume.

Even with falling transactions nationwide, Quattlebaum says cap rates and the price per square foot have held steady compared to recent years. According to Flagship, the average cap rate for MOBs through the first quarter of 2019 was 7.05 percent, only a four-basis point increase year over year. The average price per square foot in the first quarter of 2018 was $2.76 and $2.78 in 2019.

There are two portfolio deals involving 89 MOBs in the works right now that will make the second quarter more robust than last quarter, according to Camp. Included in this is CNL Healthcare Properties selling 55 MOBs to Welltower Inc.

“We are going to see a big pop in the trend line,” says Camp. “The first quarter may be a little light, [but] the second quarter is going to be strong. We will see where the rest of the year takes us.”

Assessing Risk

For lenders, developers and owners, assessing the risk involved in a medical office transaction is paramount. Reedy says that one of the risks involved, especially for a multi-tenant property, is tenant rollover. CIT Healthcare likes tenant rollover to be below 12 percent when dealing with multi-tenant buildings.

In single-tenant buildings, Reedy says the risk is understanding the credit and viability of that tenant. Furthermore, Reedy will look into a borrower’s history to determine any possible risks involved.

“We are looking at our sponsor, their connections and if they have done this before,” says Reedy. “More importantly, we are looking at the in-place tenants. We are not interested in financing a vacant box, but if you have a nice piece of real estate, you have a track record and you have signed a couple tenants in a multi-tenant facility, we will provide you with that capital that will help you lease that up and get you to the stabilized occupancy.”

For Camp, the bigger risk lies with hospital campuses. Will the healthcare tenant want to be on a hospital campus for the long-term? Will that hospital be bought or close? Camp says that with hospitals closing, merging and consolidating, he “can’t be fully secure that that will be a great place in the long run.”

Finding a Comfort Zone

Quattlebaum says that Flagship Healthcare tries not to get involved in transactions that are below a 6.5 percent to 7.25 percent cap rate to avoid competing with public REITs, which are looking at less risky investment opportunities.

“We don’t get into the 5 percent cap rate range, which is where the public REITs play,” says Quattlebaum. “That’s not what our investor profile would command.”

Additionally, the company tries to shy away from deals in excess of $20 million because then the private REIT would start competing with public REITs. Flagship Healthcare’s “fairway” is between $5 million and $20 million transactions, but, Quattlebaum notes, “just like my golf game, I’m always off the fairway.”

Quattlebaum said that on the final day of 2018, Flagship Healthcare was involved in a $50 million small portfolio sale.

Alphonso says that Anchor Health has the resources to go after several types of healthcare properties and recently surpassed the $1 billion transaction mark over the past two-and-a-half years.

Because the company looks at so many opportunities, Alphonso says Anchor looks at the history and location of the building to determine a satisfying cap rate range, not necessarily when it was built or its size. Just because it is on the market for low 6 percent or high 5 percent range doesn’t mean the building’s risk profile would warrant that rate.

“We have come across buildings that might be in a very good market but maybe the vendor is a bit older, they’re not stabilized and there may be some lease-up risk taken on there,” says Alphonso. “In those cases, we try to trade closer to the high 6s or 7. You could have two buildings that look exactly the same and built the same year, but the market dynamics will drive what’s actually happening. The backstory determines the cap rate.”


Source: RE Business

Indian River Medical Building & Apartments in Vero Beach, Fla., has come under new ownership.

Woodside Health sold the approximately 23,600-square-foot, mixed-use medical office building to Tidegate Capital for nearly $3.1 million.

Indian River opened its doors in 1984, located on a roughly 1-acre site at 1485 37th St. The two-story structure features four medical office units totaling 11,800 square feet beneath a second floor offering 14 apartment units. Indian River Radiology and Compassionate Medical Center Inc., occupying a respective 5,400 and 4,400 square feet, anchor the property’s MOB segment, which is presently 100 percent leased. The building’s one-, two- and three-bedroom residential units are all fully occupied as well.

“A mixed-use property with medical tenants and apartments is a bit unique, so it took a more specialized approach to finding the right buyer,” Joe Greulich, principal with Woodside Health, told Commercial Property Executive. “The buyer ultimately was someone who had a presence in the market with other investments and valued this asset’s position in the community.”

Woodside’s disposition of Indian River comes almost three years after the MOB acquisition and management firm’s purchase of the property in 2016. Upon taking ownership, Woodside commenced renovations to set the stage for a long-term relationship with its tenants and a long-term hold of the property. However, circumstances conspired to create the optimum opportunity to profit on the investment.

“The Cleveland Clinic recently announced that they were acquiring the Indian River Hospital, which sits adjacent to our property. Investment interest in the area increased quite a bit with that announcement,” Greulich said. “This, together with cap rate compression generally for medical office space and the fact that we succeeded in increasing rents in the apartment units created an opportunity to sell and exceed our original investment goals.”

Having acquired the building for approximately $2.2 million, Woodside sold the property at a price increase of roughly 40 percent.

Despite the sale of Indian River, Woodside continues to maintain a strong presence in Florida. The Cleveland-based company also operates in Arizona, Georgia, Michigan, North Carolina and Texas. Its purchases over the last six months include the 33,000-square-foot, five-building Tree Lane Medical Portfolio in Snellville, Ga., in metropolitan Atlanta.


Source: CPE

Sarasota Memorial Hospital has received zoning approval to build a 65-acre medical campus in Venice, FL. The $437 million project is expected to take two and a half years to complete.

Sarasota Memorial’s request to allow a hospital and related health facility to be built on a site that was previously zoned for a shopping center was unanimously approved by the Venice City Council. The health system broke ground on the campus in April, after obtaining permits to begin land clearing and deep foundation work.

The project will include a five-story, 365,000-square-foot hospital with 110 private rooms and a 28-bed emergency department. An additional two-story, 60,000-square-foot medical office building is also planned, as well as a parking garage. The facility is expected to employ 500 people once it opens.


Source: Connect Florida

Rieber Developments has debuted plans for their 12|12 Aventura project in Aventura.

The complex will serve as a mixed-use, community-focused development featuring medical offices, luxury senior living condos, a food hall dining and shopping area. The “Chelsea-Market-style” hall is proposed to establish a new Aventura Medical District in the community, serving both locals and medical professionals through retail and lifestyle offerings.

The design of 12|12 Aventura, by Arquitectonica, displays a 12-story complex comprised of 30,000-square-feet of commercial retail space, 30,000-square-feet of offices and a 150-resident luxury senior living component, as well as a parking garage. The complex will be located at 21290 Biscayne Boulevard, centrally located near the Aventura Mall and Aventura Hospital. The developer aims to create a dining and shopping destination for locals and guests, offering a mix of professional, commercial and residential communities.

A new concept in South Florida, the project is set to serve as the center of the prospective Aventura Medical District, accompanied by its sister development, Ivory 214, a medical and professional office building currently under construction. The complex intends to combine community, culture, health and wellness for convenience and community purposes.

Winmar Construction will break ground on the project in December of this year, with an expected completion date in 2021.


Source:  GlobeSt.