A medical-focused family office is expanding its value-add initiative to institutional-quality properties with the acquisition of a 114K SF outpatient building in West Houston.
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Edloe Realty, part of Houston-based Edloe Ventures, is buying Greenhouse Medical Plaza from Transwestern Investment Group and Virtus Real Estate Capital, Edloe Ventures partner Shehzad Roopani told Bisnow.
Transwestern converted the building at 2051 Greenhouse Road from office to medical after purchasing it in mid-2018.
It is currently 57% leased, as the pandemic hindered leasing activity shortly after the conversion was completed, Roopani said.
“Medical leasing isn’t like retail; it’s slow and methodical,” he said. “The slow and methodical was slowed down even further. We believe that if it weren’t for Covid, this asset would already be leased up.”
Edloe Ventures plans to boost the building’s occupancy and sell it to an institutional investor after three to five years. Transwestern’s Chris Boyd and Justin Brasell, who Roopani said had the original vision for the building, are staying on as the leasing team.
The new owner plans to add spec suites and can be more nimble than an institutional owner, which could help boost leasing activity, he said.
“We can go into the market and bring down rates if needed,” Roopani said. “We feel very confident that if we look at the trends in the market, we can get business done.”
The building came up for sale because Virtus needs to close a fund that the asset is part of, he said. Edloe bought the asset in an off-market deal brokered by Berkadia’s Sabrina Solomiany and Vasili Davos.
The Edloe family office, which includes the Edloe Health clinic network, has owned and developed smaller medical office buildings and provides property management services. This will be Edloe’s first acquisition using outside investors and the first building bought with the intention to flip and not hold, Roopani said.
Edloe and Partners Real Estate will provide property management services. Frost Bank provided financing for the deal, though Roopani declined to provide the sale price.
The 114K SF building is much larger than the average medical office building size of 50K SF to 60K SF. There aren’t many medical office investors willing to buy this large of an asset that is also value-add in nature, he said.
“The reason why Edloe does what it does is because we have this weird niche where we can do large-scale stuff, but we’re still willing to do something that requires elbow grease,” Roopani said. “Our goal is to get this to 90% occupancy and sell it to institutions.”
Edloe Realty also plans to acquire Bellaire Medical Plaza this spring, which will also be part of its value-add medical outpatient initiative with external investors.
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