LaSalle targets doctor offices

Amidst growing private interest in the US healthcare sector, LaSalle has acquired a portfolio of nine medical office buildings in New York State.

LaSalle Investment Management has acquired nine medical office buildings from New York-based real estate company First Columbia for $100 million (€70 million).

The properties were acquired through LaSalle Medical Office Fund II, a private real estate investment trust which closed in April, raising $300 million of equity. The vehicle, with leverage, has a buying power of approximately $850 million.

“The demand for services offered in medical office buildings is largely driven by the aging of the US population and a migration of healthcare delivery to an outpatient model,” said Steve Bolen, managing director at LaSalle and head of the medical office fund.

The changing face of healthcare in the US plays a key role in the increase of activity in the sector: “There has been a fundamental change in the way healthcare is delivered,” Bolen said. “Today, more healthcare is delivered on an outpatient basis by physicians in their offices.”

The nine properties, located in the greater Albany metro region, include the Hudson Medical Center in New Windsor; Hudson Slingerlands Crossing I and II; the Hudson Benedictine Cancer Center in Kingston; Plank Medical Center in Clifton Park; the New Paltz Medical Center; a St. Peter's Hospitalleased building in Guilderland and the Cushing Center; a building at St. Claire's Hospital in Schenectady; and the Pruyn Pavilion at Glens Falls Hospital in Glen Falls.

LaSalle's first medical office fund closed in 2001 on $90 million of equity. Since then the vehicle has acquired approximately $150 million of properties in the US. The firm's follow-on fund, LaSalle Medical Office Fund II, has already invested close to 30 percent of its capital.

With changing demographics in the US and a shift in how healthcare is being provided, Bolen sees increasing activity in the sector. “As the population of our country gets older, the demand for healthcare services will increase. Commercial real estate investors who invest in the medical office sector will benefit from these demographic changes.”