DESCRIPTION
AW Medical Office Fund I was a value-add real estate fund formed to deliver competitive income returns and strong potential for price appreciation by acquiring, enhancing and operating a diverse portfolio of medical office buildings in the State of Florida.
OPPORTUNITY
The Fund acquired nine medical office buildings totaling 713,947 square feet of space located on or adjacent to hospitals operated by Tenet Healthcare. The buildings were poorly leased and managed with significant near-term rollover and below-market rents. The buildings also required substantial maintenance and capital improvements. This portfolio was assembled from the hospitals which lacked focus and attention to the assets.
EXECUTION
AW repositioned the portfolio to a higher asset class with improvements and upgrades to the building exteriors, common areas and select units. AW actively identified and cured operating issues and restored tenant satisfaction at the buildings. AW converted gross leases to NNN, re-branded several buildings and obtained additional sources of revenue through cell towers, signage and parking. AW aggressively marketed the portfolio for lease and drove occupancy from 78% to 93% within thirty months. Stabilized net operating income grew by 21% during the same period. Three of the buildings were sold to private investors and the remainder of the portfolio was sold to a publicly traded REIT enabling the Fund to realize investment returns in excess of the initial target.