Two L.A. Medical Office Properties Trade for $156M

Stockdale Capital Partners has sold two medical offices in Los Angeles to Chicago-based investment manager Harrison Street for $156M.

The MOB purchases included a 55K SF building on Santa Monica Blvd. that has UCLA Health as its primary tenant and a 49K SF property on Wilshire Blvd. that has a single tenant, Cedars Sinai.

The transaction price for the properties is nearly double what Los Angeles-based Stockdale paid for them in 2015, which was about $88M.

Medical office buildings have been one of the strongest CRE subsectors during the pandemic, drawing significant interest from institutional investors and REITs. Demand for medical office space remained high despite the advent of online medical treatment during the outbreak.

According to JLL Healthcare Capital Markets research, MOB property sales in the US hit record levels of nearly $20B in 2021, surging from a plateau of roughly $14B during each of the previous three years. With average office occupancy levels hovering at around 43% across the US, interest has intensive in conversions of corporate office space to medical uses.

Southern California has been a hotbed of MOB trading activity in recent months. One of the highest profile acquisitions was Lionstone Investment’s $125M all-cash purchase of the Newport Lido Medical Center in Newport Beach.

The two-building, 147K SF campus is fully leased and adjacent to the 434-bed Hoag Hospital Newport Beach. JLL Healthcare Capital Markets represented the seller in the transaction.

“Newport Lido Medical Center represents one of the most significant sale transactions in the history of the medical office sector. There are few properties that match the extraordinary demographics within Newport Beach,” JLL said, citing the Newport Lido’s reputation as one of the top medical centers in the country.

Intense recent trading activity in Los Angeles medical offices included LaSalle Investment Management’s $74M purchase of a 50K SF Class A MOB in Beverly Hills from UBS Realty Investors, and Meridian’s $82M acquisition of Beverly Hills Medical Plaza, a three-story, 68KSF Class A MOB with 88% occupancy, GlobeSt reported.

Earlier this month, JLL secured $42.5M in refinancing for Wilshire West Medical Tower, a medical office building in the Brentwood section of West Los Angeles, for a private borrower who is an owner-operator of the facility. The property totaling about 79K SF, is leased to a diverse mix of medical tenants.

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