Banking on a growing shift in how Americans will receive their healthcare in the future, IRA Capital is rapidly building a national portfolio of medical outpatient buildings and one of the largest in the sector.
The Irvine-based private equity firm’s new investment venture, backed by Canada Pension Plan Investment Board and an unnamed global institutional investor, has acquired 40 medical outpatient properties totaling more than 2 million square feet across the U.S. in recent months.
“The portfolio aligns directly with our conviction in medical outpatient buildings as essential, needs-based healthcare infrastructure,” Amer Kasm, co-founder and a managing partner of IRA Capital, told the Business Journal.
The investments come as healthcare providers are moving more procedures from hospitals to outpatient clinics, increasing demand for these medical buildings. Medical outpatient buildings are places where patients receive services such as imaging, surgery and specialty care without staying overnight in a hospital.
CBRE reports that the medical office building (MOB) sector saw a 122% jump in investment volume from the previous quarter, reaching $6.1 billion in Q4.
This was largely driven by the $2 billion sale of an 18-million-square-foot portfolio across 296 properties nationwide from Welltower to Remedy Medical Patients and Kayne Anderson Real Estate.
Health Real Estate Priority
Founded in 2010, IRA Capital, which specializes in commercial real estate investments, recently made headlines after selling the Von Karman Corporate Center in Irvine to Lennar for $232 million.
IRA Capital officials said in the past 18 months, they’ve made medical and health care real estate a focus, pouring $1.7 billion into the sector, thus making them one of the most active institutional investors investing in these products.
Earlier this month, IRA Capital announced that its joint venture had acquired 16 medical outpatient buildings totaling about 517,680 square feet across Texas, Florida, North Carolina and Indiana, officials said.
The purchase follows a December deal in which they acquired a 24-property portfolio totaling 1.5 million square feet across 11 states from an undisclosed REIT that launched the billion-dollar platform.
“These investments build on our strategy of assembling a scaled national platform focused on well-located outpatient facilities affiliated with leading health systems,” Kasm said.
“Medical outpatient real estate is a core pillar of our broader healthcare investment strategy due to its durable demand drivers and long-term income stability,” Kasm said.
IRA officials said that, in total, it has acquired more than 12.5 million square feet of medical outpatient buildings and health care real estate across 32 states, representing over $4 billion in total capitalization.
‘Silver Tsunami’
Kasm said the tailwinds justify the massive investments in the healthcare sector.
The so-called “Silver Tsunami,” aging baby boomers, is expected to shift the medical and consumer landscape in the next several years. By 2030, most of the 75 million-strong demographic will have turned 65.
According to Forbes, seniors aged 65 and older make up a little more than one-third of U.S. health care spending.
Kasm also cites increased health care use and the ongoing shift from inpatient to lower-cost outpatient care.
Industry leaders have also viewed medical outpatient buildings as more resilient than traditional office properties, which struggled with high vacancy rates and have yet to fully rebound since the onset of the pandemic.
Meanwhile, IRA Capital officials expect demand for medical outpatient buildings to accelerate, “with the sector projected to grow at a 7.5% compound annual growth rate through 2028.”
“Investors are prioritizing sectors with durable cash flow, strong demographic tailwinds, and proven stability throughout economic cycles,” said Kasm.
MOB Popularity
Kasm said IRA Capital and the joint ventures’ 40-property portfolio is mostly occupied by high-acuity medical providers.
It includes eight specialized surgery centers. More than half the space is leased to national or investment-grade tenants.
Many buildings in the first 24-property portfolio that they had acquired in December directly connect to hospitals or sit in established medical corridors.
Tenants in the portfolio include major healthcare providers such as Ascension, Trinity Health, CommonSpirit, Tenet Healthcare and UnitedHealth Group, officials said.
More Investments to Come
IRA Capital is continuing to scour for deals.
Kasm said the joint venture has secured over $1 billion in committed equity, enabling it to acquire more than $3.5 billion in medical real estate.
“We believe our platform is uniquely positioned to scale alongside the transformation of healthcare delivery,” Kasm said. “We intend to be an active and disciplined acquirer of high-quality medical outpatient assets across the U.S.”
IRA Capital plans to invest that capital over the next 18 to 24 months and aims to actively buy within the sector.
“We are particularly focused on high-growth markets experiencing strong demographic in-migration and meaningful health system investment,” said Kasm. “That said, we remain fundamentally market-agnostic – prioritizing asset quality, credit tenancy, high-acuity medical uses, and long-term cash flow. When those fundamentals align, we are prepared to move decisively.”
