Carter Validus REIT Buys a Bundle in OK City

By Barbra Murray

John Carter, CVMC REIT II

Oklahoma City—Carter Validus Mission Critical REIT II Inc. has been on a buying binge since making its first purchase in August 2014, and its latest acquisition—the 328,000-square-foot HPI portfolio—gives the company a big boost in the region. CVMC REIT II shelled out $116.5 million for the nine-property collection of healthcare facilities, which is located in Oklahoma City and affiliated with Healthcare Partners Investments LLC.

The HPI Portfolio’s two largest properties are an 86,700-square-foot acute care hospital offering 31 beds and a newly built, 103,000-square-foot acute care hospital encompassing 14 beds. The remainder of the collection consists of one- and two-story integrated medical facilities ranging in size from 5,000 square feet to 43,700 square feet and offering a cornucopia of services, from primary care to such specialties as sports medicine. Size and services, however, are not the portfolio’s most head-turning feature—it’s the 100 percent occupancy level that serves as the ribbon on this package.

“This 100 percent occupied portfolio of healthcare assets with long-term leases and high-quality tenants demonstrates our commitment to building a strong and diversified portfolio that we believe will create value for stockholders,” John Carter, chairman & CEO of CVMC REIT II, said in a prepared statement.

The investment trust has been snapping up assets in both the healthcare and data center sectors all year. The list of transactions includes two properties that were under construction when the deals closed: the 71,700-square-foot Tennessee Data Center in Franklin, Tenn., and the 50-bed Vibra Rehabilitation Hospital of Rancho Mirage in Rancho Mirage, Calif. Both assets were fully pre-leased. The deal flow is consistent, but finding the right property in the right place at the right price isn’t child’s play.

“Over the past four years we have seen more investment from non-traditional health care real estate buyers. We believe the increased buyer pool has created downward pressure on cap rates,” Alex Stacy, Carter Validus’ Chief Acquisition Officer, Healthcare, told Commercial Property Executive. “We have been able to tap into the relationships our team has built over the last couple of years and find assets that have good value.”

As of mid-July, CVMC REIT II had amassed a 2 million-square-foot portfolio consisting of 34 healthcare facilities and eight data centers acquired at a total cost of $625.2 million. Not bad for two years’ work.