While MOB deals have certainly been taking place during the COVID-19 pandemic, there is no doubt that activity has slowed considerably.
However, one MOB investor seems to have not only remained active but picked up its pace of acquisitions in recent months.
That firm is IRA Capital, a private equity investor based in Irvine, Calif., that has a focus on MOBs.
Since April 10, according to Revista data, the investor has acquired 10 MOBs with well over 300,000 square feet of space at an aggregate cost of more than $150 million – the price for a couple of its purchases have not been disclosed. The firm also recently acquired a three-building, 160,000 square foot headquarters and life sciences campus in Aliso Viejo, Calif., occupied by Glaukos Corp. (NYSE: GKOS).
In a news release announcing that purchase, IRA noted that it has invested $250 million in healthcare facilities during the past couple of months.
One of IRA’s biggest MOB acquisitions of late closed on May 20, when it acquired the fully occupied, 62,969 square foot Magan Medical Clinic at 420 Rowland St. in Covina, Calif., for $39.85 million, or $533 per square foot (PSF). Revista research shows that the seller was Denver-based DaVita Inc. (NYSE: DVA), the previous tenant in the building. When the 100-year old, 50-physician Magan Medical Clinic became part of Eden Prairie, Minn.-based Optum Health (part of UnitedHealth Group (NYSE: UNH) last year, the building became available.
IRA’s most recently recorded MOB purchase was of a 41500 square foot facility in Manhasset, N.Y., just outside of New York City on Long Island. The price was not disclosed.
In an exclusive interview with Healthcare Real Estate Insights, Amer F. Kasm, a cofounder and one of five principals of IRA Capital, said the company competed for the Magan Medical Clinic MOB in a “limited process.”
The clinic building, according to Mr. Kasm, who is responsible for directing IRA’s investment strategy and overseeing the firm’s asset and portfolio management processes, “checked a lot of boxes for us.” Those included, he said: “Strong tenant with long operating history, great location, long-term lease, diverse mix of services being offered, and the fact that significant dollars were recently invested into the facility.”
As noted, IRA Capital has been a very active MOB investor of late, including during the COVID-19 pandemic. It’s overall portfolio now totals more than 2 million square feet and a value topping $750 million.
It plans to continue to acquire assets in the remainder of 2020.
“Taking into account our upcoming closings/pipeline and investor demand, we expect to acquire another $300 million of transactions in 2020,” Mr. Kasm says. “Kind of an odd time to be making big bets, but we are uniquely positioned given our current capital position. We feel strongly about our long-term investment thesis and feel that the current environment will create some interesting opportunities for our company.”
So, why no slowdown for IRA during the throes of the pandemic?
“Our company has been more active than prior years, which has been largely driven by our capital position resulting from the sale of a 16-property portfolio to a public REIT that occurred in the first quarter (of 2020),” Mr. Kasm told HREI. “We have had some time to build up a solid pipeline knowing that we would be exchanging our capital fairly quickly.
“As you know, many of the larger public players have been on the sidelines during the pandemic, which has allowed private equity groups like ourselves the opportunity to fill a void,” he added. “The current environment has highlighted our entrepreneurial culture and our ability to be nimble, flexible, and creative – and we have moved swiftly and aggressively on some sizable transactions despite the market fluctuations.”