November 6, 2015bisnow.com
Why Meridian Property Remains Bullish on Medical Office
Meridian Property Co has sold a 69k SF Rohnert Park medical office building for $21.5M to a private investor based out of San Mateo. And Meridian COO John Pollock tells us the property at 5900 State Farm Dr is a prime example of the kind of value-add medical office properties that Meridian continues to search for and execute its strategy on.
The buyer, Nazareth Enterprises, owns several medical office buildings and healthcare facilities around the Bay Area. The sale, which represents a cap rate of 5.8%, reflects the strong demand for medical office buildings even as supply remains low, says Vincent Schwab, vice president of investments for Marcus & Millichap. Vincent repped both the buyer and seller.
Meridian acquired the Rohnert Park building (image on right) in March 2014. Kaiser Permanente occupied the bottom floor, where it provided primary care services. The second floor had been vacant for a year at the time of purchase.
Meridian took the second floor office space and converted it into medical space. John says the firm saw an opportunity to bring in more medical providers in a city that falls below the national average for number of doctors for every 1,000 residents. Meridian put more than $6M into converting the 38k SF second floor into the Petaluma Health Center's Rohnert Health Center.
On the ground floor, Kaiser remained operational during the construction and extended its lease, which had 3.5 years remaining, to 11 years.
The Rohnert Health Center deal is the latest for Meridian, which bought a 19k SF MOB in Oakland off-market last month. John says the company has another four properties in escrow in San Jose, Pleasanton, Oakland and Watsonville totaling $25M.
John tells us Meridian seeks out locations with strong healthcare providers and is acquiring land and buildings in Northern and Southern California where its expertise can add value. Finding buildings that can provide convenient access for patients at affordable rates for the provider takes creative thinking with a healthy dose of collaboration, he adds. Meridian has more than 170k SF of MOBs in development or redevelopment and another 100k SF in the acquisition pipeline, John says.