NexCore, Nuveen Acquire National Medical Office and Life Sciences Portfolio for $620.4M

by John Nelson

CHICAGO AND DENVER — NexCore Group, a national healthcare real estate developer and owner, has teamed up with global investment management firm Nuveen Real Estate to acquire a portfolio of 27 medical office and two life sciences buildings spanning nearly 1.2 million square feet.

IRA Capital, a private equity firm based in Southern California, sold the portfolio in two transactions totaling $620.4 million. The portfolio spans 13 states: Arizona, California, Florida, Illinois, Michigan, North Carolina, New Jersey, New York, Ohio, Oklahoma, Pennsylvania, Texas and Wisconsin.

The medical office properties comprise ambulatory surgery centers, micro-hospitals, freestanding emergency departments and single- and multi-tenant clinics. The properties were 99 percent leased at the time of sale to 38 tenants, the vast majority of which are well-established healthcare systems. The medical office buildings sold for about $463 million, according to NexCore, which will manage the facilities moving forward.

Allianz Real Estate provided $234 million in acquisition financing on behalf of NexCore and Nuveen for the medical office portfolio. The financing is structured on a seven-year term with both a fixed-rate tranche totaling $163.8 million and a floating-rate tranche totaling $70.2 million. Chicago-based Nuveen is using equity for the medical office assets via its newly launched U.S. Cities Office Fund.

The two life sciences assets are primarily used for pharmaceutical testing and medical device manufacturing. Located in Southern California and Middleton, Wis., the properties span 420,000 square feet and were fully leased at the time of sale to three tenants.

The life sciences properties sold for $157 million, according to NexCore. Nuveen purchased the facilities using money from the balance sheet of its parent company TIAA.

The portfolio includes two life sciences building, including this asset in Middleton, Wis., leased to pharmaceutical firm PPD.

Including this most recent transaction, NexCore and Nuveen have partnered since November 2020 on a total of more than $687 million in acquisitions, according to Todd Varney, chief development officer and managing partner at NexCore.

“The NexCore-Nuveen partnership has been an extremely fruitful one, where NexCore serves as the advisor, partner and property manager,” says Varney.

The duo’s joint holdings include 34 buildings comprising 1.4 million square feet, as well as two additional buildings in development that will add another 200,000 square feet.

IRA Capital, which is one of the most active healthcare real estate investors in the country, has been on a selling spree recently. The company sold a portfolio of 18 medical office buildings last year to Welltower (NYSE: WELL) and plans to dispose of another $1 billion in assets in the next year, including healthcare, multifamily, industrial, net lease and hospitality properties.

“IRA, at its core, is a relationship-focused real estate partner,” says Samir Patel, principal and co-founder of IRA Capital. “We believe in creating value by developing and maintaining long-term partnerships with our tenants, and by helping them become more efficient. This partnership approach has positioned us exceptionally well to continue our growth well into the future.”

Since 2004, NexCore has developed and acquired over 13.9 million square feet of healthcare properties across the country and currently manages over $2.8 billion of real estate. NexCore is headquartered in Denver, with regional offices in Chicago; Bethesda, Md.; Portland, Ore.; Dallas; Orlando, Fla.; Laguna Niguel, Calif.; and Indianapolis.

Nuveen Real Estate is one of the largest real estate managers globally with approximately $134 billion of assets under management.

— John Nelson

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