WASHINGTON, D.C. – November 4, 2015 – (RealEstateRama) — With more than 170,000 SF in development/redevelopment and another 100,000 SF in the pipeline, Meridian is still aggressively pursuing more value-add medical office opportunities throughout California
SAN RAMON, CALIF. – Meridian, a full service real estate developer and owner of medical real estate, is pleased to announce that it has closed escrow on the sale of its 69,000-square-foot medical office building located in Sonoma County at 5900 State Farm Drive in Rohnert Park, Calif. The purchase price was $21.5 million, representing a cap rate of 5.8%.
Meridian acquired the building in March of 2014. At the time of the acquisition, the building was 50% vacant, with Kaiser Permanente providing primary care services to its members on the ground floor. The second floor, which had been occupied by an office tenant, had been vacant for a year.
According to Meridian’s COO John Pollock, “This presented an opportunity for Meridian to convert the second floor to medical space in the hopes of adding one or more medical providers to a city that historically had a lack of medical services. At the time of the acquisition, Rohnert Park had 53 doctors, or 1.2 doctors per 1,000 residents, which is 50% of the national average of 2.4 doctors per 1,000 residents.”
On August 12, 2015, Meridian saw their vision for the building, and for better access to quality health care in an underserviced area, come to life with the grand opening celebration of Petaluma Health Center (PHC)’s Rohnert Health Center on the second floor. At a cost of over $6 million dollars, Meridian had converted the entire 38,000-square-foot second floor from a vacant office to a fully operational health care center. One of the Rohnert Park Health Center’s highlights is a large dental facility that includes 15 dental chairs with an emphasis on prevention-focused dental care for children 0-21. The center also offers behavioral health services, vision services, medical and gynecology services, wellness programs, plus it has an on-site laboratory and pharmacy. Throughout this entire process, which took over eight months to complete, Kaiser remained fully operational on the ground floor. Meridian also extended Kaiser’s lease term from 3.5 years remaining to 11 years.
Marcus & Millichap’s Senior Vice President Investments Vincent Schwab, based in the firm’s San Francisco office, represented both the buyer, a private investor based in San Mateo, Calif., and the seller in the sales transaction. The buyer, Nazareth Enterprises, Inc., owns several medical office buildings and health care facilities throughout the Bay Area.
“The sale of 5900 State Farm Drive further re-enforces the strong investor demand for medical office buildings,” said Schwab. “However, the supply of available opportunities continues to be very limited as demand remains high as private investors, providers and institutional buyers compete to find medical office properties and investment opportunities.”
Less than four weeks ago, Meridian announced that it had closed escrow on the purchase of a 19,202-square-foot medical office building located in Oakland, Calif., in an off the market transaction. Currently, Meridian is in escrow on four more properties with a combined total of $25 million. The development/redevelopment projects are located in San Jose, Pleasanton, Oakland and Watsonville.
“With more than 170,000 square feet in development/redevelopment plus another 100,000 square feet in the acquisition pipeline, we are still looking for more. We really have an insatiable appetite for land and buildings where we can bring our expertise to bear and create value. Our desired building size can range from 15,000 to over 100,000 square feet and can be located in either northern or southern California. However, we want to be situated within healthcare nodes with strong providers,” Pollock said.
A division of Marcus & Millichap Company, San Ramon, Calif. based Meridian Property Company is a full-service real estate developer having completed over one million square feet of innovative and integrated commercial office, primarily medical, since its inception in 2000. Meridian’s services are broad in scope but meticulous in detail — from site evaluation and land acquisition to entitlement and planning to construction and management. For more information, see mpcca.com.