San Diego-based health care developer Pacific Medical Buildings secured a $41m construction-to-permanent loan for the development of The Hoag Health Center in Irvine, California, which is reflective of a booming health care industry buoyed by new construction and aggressive lending.
The 12-year, fixed-rate loan on the Hoag center, provided by an undisclosed correspondent life insurance company, is interest-only during the two-year construction period.
New construction starts for medical office buildings were up 50% last year, according to data provided by HFF, which arranged the financing. And loan originations on health care properties increased 92% from Q3 to Q4, according to a preliminary estimate from the Mortgage Bankers Association.
“Demand for medical office debt and equity placements is robust given the resiliency in the sector that was proved through the downturn in the economy,” Evan Kovac, a managing director with HFF’s healthcare practice, told Real Estate Capital.
The planned 150,000 sq ft medical office development, unlike conventional office buildings, will feature large and more open multi-use blocks of space, designed to allow several physicians to work more efficiently under the same roof.
“This provides an efficiency benefit as the square footage requirements per physician are smaller,” Kovac said.
Scheduled for completion in early 2016, the center will consist of three two-story, 50,000 sq ft ambulatory care centers. It will sit directly across from Hoag Hospital Irvine, a 154-bed private hospital with inpatient, outpatient and emergency room services, which is within walking distance to Kaiser Permanente Hospital. It is 100 percent leased to Hoag Hospital.
Medical office building developer Pacific Medical Buildings has constructed 83 healthcare projects throughout the Western United States and it owns and manages 52 facilities totaling approximately 3.5m sq ft.