GRAND RAPIDS — A 105,000-square-foot medical office building fully occupied by Metro Health-University of Michigan Health was acquired by new owners as part of a multi-state, 25-building property deal, MiBiz has learned.
The Metro Health Park East building located near the Cascade Road and I-96 interchange sold Aug. 11 to an out-of-state investment group for $35.3 million, according to Grand Rapids Charter Township property records.
The property was part of a medical office building portfolio transaction Los Angeles-based CBRE Global Investment Partners completed on behalf of undisclosed clients.
Pam Barnett, director of corporate communications for CBRE Global, confirmed to MiBiz that the Grand Rapids Township facility was one of 25 medical office buildings the firm acquired over 10 states.
The portfolio is concentrated in the Chicago and Atlanta metropolitan areas, according to a statement from the brokerage firm.
Wyoming-based Metro Health has a long-term lease in place for the building and expects no changes to its operations despite its new landlord, spokesperson Jennifer Hoff wrote in an email to MiBiz. The health care provider offers urgent care, X-ray and outpatient surgery services at the facility.
Metro Health also owns an adjacent parcel of vacant land but has no immediate development plans for it, Hoff said.
CBRE purchased the multi-state portfolio from a health care real estate investment fund comprised of Los Angeles-based Kayne Anderson Capital Advisors LP and Chicago-based MB Real Estate Services Inc., a real estate management firm that does business as MBRE Healthcare. The two firms will continue to manage the properties and maintain a 5-percent ownership stake in the portfolio, according to a statement.
A Wall Street Journal report on the transaction citing unnamed sources pegged the overall acquisition cost at between $510 million and $590 million.
On the whole, the West Michigan market continues to be a magnet for out-of-state institutional capital, according to commercial real estate sources.
Last week, MiBiz broke news that Tesla Tool and Die’s Cascade Township facility was acquired for $9.5 million by Rosemont, Ill.-based Brennan Investment Group as part of a multi-state, 11-building portfolio.
“The stability of our market coupled with the returns investors are able to get relative to other markets have made the market attractive,” Jeff Hainer, a senior research analyst in the Grand Rapids office of brokerage firm Colliers International Inc., wrote in an email to MiBiz.
Colliers International was not involved in the CBRE deal.
A recent investment report from Colliers noted that the low inventory of quality assets has made deals hard to come by in the region, and at the same time, capitalization rates — the rate of return a real estate investor can expect to see — have been dropping in the market.
Nonetheless, Hainer believes West Michigan’s status as a tertiary market will continue to be attractive to a variety of outside investors.
“Other markets have seen return margins squeezed thin as opportunities in major markets become increasingly hard to find, and investors are now looking towards secondary markets to add buildings to portfolios,” Hainer wrote in an email.