Reports: Memorial Hermann Sale Sets National Pricing Record
The acquisition of Memorial Hermann Medical Plaza this week set national records.
Chicago-based LaSalle Investment Management, along with its ownership partner, Mischer Healthcare, acquired Memorial Hermann Medical Plaza, a 510K SF, Class-A medical building in the Texas Medical Center. The price tag is the highest paid for a medical office building in the U.S., according to the Houston Business Journal. It was appraised at $201.9M in January, and the Wall Street Journal reports the asset sold for a record-breaking $400M. Memorial Hermann is at 6400 Fannin St.
LaSalle’s Managing Director David Schreiber said he has tracked this property for a long time.
“We really like the space, and we really like the profile and characteristics of healthcare in the current economic environment,” he told the Houston Business Journal. “It's challenging to find medical office assets in the Texas Medical Center — the lion’s share of properties in the TMC are owned by the 61 member institutions. So, I’ve tracked this building for a long time. There are a lot of opportunities to reduce operating expenses, and its parking garage has this huge potential to drive further value.”
He also revealed the Memorial Hermann acquisition is a long-term hold.
“Generally, when we’re buying core investments, we’re looking at holding the property for 10 or more years,” he said. “Given the unique aspect of this property, we very well may own it for a lot longer.”
While there is uncertainty around the repeal of the Affordable Care Act and the effects on the healthcare system, medical office buildings remain a strong investment property type. Other experts are concerned the robust demand for MOBs will eventually slow down and predict the market is heading for a bubble with the oversaturation of MOBS in some select markets.
In Houston, off-campus sites and medical office buildings are on the rise in the suburban markets, which is driven by a need to bring medical services closer to users in those communities, but the Texas Medical Center remains a hotbed of activity.