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Medical Properties Riding High Even as Other Commercial Real Estate Founders


(MINNEAPOLIS, MN) -- Financing for medical office properties is widely available, even as other commercial real estate categories scurry to find new loans or to refinance older debt.

That's what Healthcare Real estate Insights, a six-year-old industry newsletter, is reporting.

The Minneapolis, MN-based publication says recent deals have included $250 million in new debt and $30 million in new equity from Prudential Real Estate Investors (PREI), and a separate effort to create a new $40 million medical real estate investment fund.

The Chicago-based healthcare real estate firm, Lillibridge, recently obtained $250 million in debt with a variety of sources, and secured $30 million in equity from PREI, which is part of Prudential Financial Inc. (NYSE: PRU).

The debt was used to refinance existing medical properties, while the fresh equity - PREI's fourth venture with Lillibridge - is earmarked for additional medical real estate acquisitions and new developments, according to the newsletter.

"We continue to acquire and develop even in these tough times and we have an equity source that believes in the management team and the assets that we're buying and developing," Lillibridge CFO Joe Kurzydym told HREI.

Meanwhile, Nashville, Tenn.-based developer Oman-Gibson Associates says it is looking to raise $40 million from investors, and then leverage new medical real estate developments and acquisitions in the 40 percent to 50 percent range. As a result, the fund could invest up to $80 million to $90 million in healthcare real estate.

"We believe this allows us to take advantage economic conditions that exist today," according to Tom Gibson, one of the firm's principals.
 
"Healthcare is still viewed as a counter-cyclical play, and the markets that we're going after - in the $1 million to $10 million range - are still relatively easy to finance because of the size.

"Many of the banks and institutions are shying away from mega-deals and the smaller deals obviously pose a lot less risk for both investors and banks. We think this is an opportunity for our company and the investors in the fund to take advantage of that."



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