GFH Financial Group announced increasing its exposure to the medical office/clinics sector through a second US Medical Clinics Portfolio in a transaction valued at c. US$400 million. The income-yielding portfolio is comprised of 11 geographically diversified assets spread across four US states – California, Texas, Maryland and Louisiana.
Covering an area exceeding 1 million square feet, the Portfolio is anchored by investment-grade credit tenancy through Baylor Scott & White (Moody’s Aa3), Texas A&M Health Science Center (Fitch: AAA), Texas Tech University (Fitch AA+), Memorial Hermann (S&P: A+) and Tidal Health (Moody’s:Aa3). The assets also offer unique specializations within their respective submarkets, positioning them for high occupancy and rent growth.
Supporting the investment, the medical clinics sector has been strong performing and proven to be highly resilient to economic downturns, with 99% rent collection during the COVID-19 pandemic. Furthermore, the medical clinics occupancy reflected the strong demand for the sector in the first half of 2022 according to Colliers reaffirming it resiliency. The sector also continues to benefit from population growth and the aging of the US population accompanied by a steady increase in healthcare expenditure, which accounted for 19% of the US GDP in 2021 as well as the continued increase in demand for outpatient services that are provided in the medical clinic sector.
The investment capitalizes on the joint venture partnership with Big Sky Medical (Big Sky), a highly reputed and experienced asset management platform focusing on medical assets with a proven track record of acquiring and managing healthcare properties. The principals of Big Sky Medical have invested in nearly 6m square feet comprising approximately 100 medical assets across 19 states with an overall current portfolio value of US$ 2 billion. GFH aligns interests with Big Sky medical as both share the same focus of investing in and aggregating assets in the high-demand and downturn-resistant medical sector. GFH’s partnership with Big Sky has already resulted in a number of acquisitions totalling approximately $500mn in the past six months alone. This transaction is the third in a series of joint acquisitions.
Commenting, Nael Mustafa, Co-Chief Investment Officer – Real Estate at GFH said, “We are pleased to announce the acquisition of this prime, income-yielding medical clinic portfolio as part of GFH’s ongoing expansion in the medical office building sector in fast-growing cities across the US. We believe strongly in the long-term fundamentals in the healthcare sector and the dynamics that are supporting an increase in demand for high-quality medical office space. This includes aging populations and growth in out-patient care which continues to make the sector highly recession-resilient and unimpacted by economic cycles. We look forward to working with our partner Big Sky Medical to maximise the value of these assets.”
To date, GFH has built a portfolio of assets in the US medical office building sector valued at c. US$1 billion.