Latest Acquisition Brings Firm’s Portfolio to More Than 1 Million Square Feet in Three Major Markets in the Southwestern U.S.
Rancho Santa Margarita, CA (August 02, 2016) – Cypress West Partners, has announced the acquisition of the McHenry Medical Building located at 1541 Florida Ave. in Modesto, CA. The firm acquired the 62,000-square-foot, multi-tenant medical office building for $9.45 million from Medical Surgical Associates.
The 100 percent-leased building is situated on the campus of Doctors Medical Center of Modesto, a 465-bed, multi-specialty, Level II Trauma Hospital operated by Tenet Health. The three-story building is comprised of a large doctors group, First Choice Physicians Partners, made up of 26 doctors that specialize in a wide range of services which include the following: cardiovascular surgery, urology, internal medicine, hematology/oncology, orthopedic surgery, pediatrics, gastroenterology, otolaryngology, rheumatology, and family medicine. The building also has clinical lab and research space. Additional tenants include Laboratory Corporation of America and Quest Diagnostics.
“This building is right in our wheelhouse as it is the only leasable medical office space on the campus of a $4 billion hospital. While it is fully occupied, the need existed for an institutional ownership group to come in and make major capital improvements to both building systems and aesthetics. We’ve been working with the seller since 2015 to complete the transaction and now Cypress West will implement its strategy to make the building more efficient, solidify its position as the best asset in this submarket and improve the overall patient experience,” said Chris Cumella, Partner, Cypress West.
Cypress West acquired the property under a ground lease with the hospital and plans to invest more than $1 million in initial capital improvements. McHenry Medical Building was constructed in 1991 and is due for some significant upgrades and replacements. Cypress West plans to modernize the elevator equipment, replace HVAC systems, refurbish fire safety systems, install new roofing and completely renovate the interior common areas. Cypress West’s affiliate Cypress West Realty Management, Inc. will provide the day-to-day property management functions.
This transaction marks Cypress West’s fourth joint venture deal with MedProperties Holdings, LLC, a national, healthcare-focused real estate private equity firm headquartered in Dallas. “We continue to double-down on our value creation plan with MedProperties and anticipate closing several more opportunities together before years-end,” said Cumella. Capital One Healthcare Financial Solutions provided the debt for this transaction, as well as the joint venture’s previous three acquisitions.
This acquisition brings Cypress West’s total portfolio to more than 1 million square feet of space in three major markets in the Southwestern U.S. “Reaching 1 million square feet is a major milestone for our company and the fact that we’ve achieved this in less than three years is a testament to the focus and dedication of our employees,” said Jeff Johnson, partner at Cypress West. “We now have scale in the markets where we operate and the quality of our management and leasing platform is beginning to make a significant impact on the overall performance of our portfolio.”