A joint venture between Remedy Medical Properties and Kayne Anderson Real Estate picked up a suburban Chicago medical office for $71 million, underscoring the strengthening investor demand for the niche asset class as well as the value owner-occupants can unlock with a so-called sale-leaseback deal structure.
The venture of Chicago-based Remedy and Florida-based Kayne Anderson Real Estate paid bought the 93,400-square-foot Rush Oak Brook Medical Center at 2011 York Road in the western suburb, Crain’s reported. That’s about $760 per square foot.
The seller was Rush University System for Health, which developed the property in 2018. The Remedy-Kanye venture plans to lease the three-story building to Rush on a long-term deal.
Business occupants who own the real estate they occupy for manufacturing, medical offices and other uses have increasingly turned to sell their property under conditions that allow them to both remain in the space for the foreseeable future as a tenant and also extract capital without borrowing amid surging interest rates.
As Chicago’s commercial property sector grapples with record-high vacancies, toughening lending standards and rising interest rates, medical properties stand out as a safer real estate investment due to their in-person use and reliable cash flow.
While overall real estate activity in the healthcare realm has dipped this year, likely as a result of interest rates driving up borrowing costs, Remedy and Kayne are banking on the aging baby boomer population to fuel demand for healthcare services. The acquisition aligns with their belief that major health systems will increasingly shift services to outpatient facilities, such as the Rush Oak Brook Medical Center.
Remedy’s Chief Investment Officer, Joe Magliochetti, emphasized the opportunity to expand its relationship with Midwest Orthopedics at Rush, highlighting the property’s significance as an orthopedic center and outpatient hub for various clinical specialties.
The deal brings Remedy’s medical office portfolio in the Chicago area to over 2.5 million square feet, contributing to its nationwide growth of about 50 percent since 2020. Nationwide, the firm owns around 30 million square feet across 43 states, the outlet reported.
— Quinn Donoghue