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MedProperties and Cypress West Partners form joint venture for value-added acquisition of California medical office building

 

Last updated 4/6/2018 at 11:01am

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The Redhawk Medical Center, located on Temecula Parkway, one block east of Meadows Parkway, has new owners in MedProperties Holdings and Cypress West Realty Partners.

TEMECULA – With a favorable purchase price, immediate cash flow and plenty of upside, the 32,471-square-foot Redhawk Medical Center in Temecula is the most recent "find" for MedProperties Holdings and Cypress West Realty Partners.

MedProperties Holdings, a national health care real estate private equity firm headquartered in Dallas, formed a joint venture for the acquisition with Cypress West, a Rancho Santa Margarita, California-based firm that acquires and manages health care properties.

The Redhawk acquisition, which closed March 15, was the fifth joint-venture acquisition for MedProperties Holdings and Cypress West and the 19th investment by MedProperties Investment Partners Fund.

The fully leased, multi-tenant medical office building is located in the Wine Country of Southern California, less than 2 miles from the 140-bed Temecula Valley Hospital, a multi-specialty acute care facility that opened in 2013. The offices are anchored by McKesson - US Oncology, Pediatric Partners and California Imaging & Diagnostics, which represent a combined 52 percent of the overall tenancy.

"We saw this as a great valued-added investment opportunity for several reasons," MedProperties Managing Principal Darryl Freling said. "In the opinion of our firm, and Cypress, the purchase price cap rate was well above market for a southern California medical office building, and the purchase price was well below replacement cost. Based upon what we believe to be a true market cap rate for the asset, it will deliver value-add returns despite being fully stabilized with long-term leases.

"In fact, the property has already topped our projections, as the purchase price was determined based upon an occupancy of 95 percent, but the vacant space was filled during due diligence, bring it to 100 percent occupancy by the time we closed. The additional lease will be accretive and provide incremental revenue and value upon exit, creating value-add returns to the fund."

The Redhawk acquisition is also a good fit with the goals of MedProperties Investment Partners Fund, MedProperties Managing Principal Roman Kupchynsky said.

"We invest in joint venture partnerships with qualified developers of medical offices and single-tenant specialty facilities, and with owner-operators of existing facilities where there is the opportunity to add value," Kupchynsky said. "Here we have both an asset that meets all of our investment criteria and a proven partner in Cypress West. This transaction checks all the boxes and should perform well for our fund investors."

CIT Bank arranged debt financing for the Redhawk acquisition.

MedProperties is a Dallas-based health care 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 health care real estate, including multi-tenant medical office buildings and single-tenant, specialty health care facilities throughout the U.S. MedProperties invests through its discretionary funds and through stand-alone investment vehicles. MedProperties is dedicated solely to investments in health care real estate. For further information on MedProperties, visit www.medpropertieslp.com.

Cypress West Partners was formed through strategic affiliations with institutional investors, high-net worth individuals and family offices with the purpose to acquire, develop and manage health care properties across the western United States. At Cypress West, the team is focused on understanding and implementing on all aspects of what makes a high-performing asset. Cypress West is highly experienced at working across the health care spectrum, from institutional owners to hospitals and individual doctors. The strength and legacy of its business model is in Cypress West's method for successfully acquiring the right medical real estate assets backed by solid data analytics, followed by a strategic leasing and management plan to increase value at the property and investment levels. To learn more about Cypress West Partners, visit www.cypresswestpartners.com.

 

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