GFH acquires US medical offices portfolio in $400m deal

The value of the group’s US healthcare portfolio exceeds $1bn after deal

Bahrain investment bank GFH Financial Group's income from co-investments reached $10.94 million in the second quarter of 2022. AFP

GFH Financial Group, an investment bank based in Bahrain, has acquired a portfolio of medical clinics in the US in a deal valued at $400 million, expanding its real estate portfolio in the world's largest economy.

The income-yielding medical clinics portfolio consists of 11 assets with more than one million square feet of space and is spread across California, Texas, Maryland and Louisiana, GFH said.

“We are pleased to announce the acquisition of this prime, income-yielding medical clinic portfolio as part of GFH’s ongoing expansion in the medical office building sector in fast-growing cities across the US,” Nael Mustafa, co-chief investment officer of real estate at GFH, said.

“We believe strongly in the long-term fundamentals in the healthcare sector and the dynamics that are supporting an increase in demand for high-quality medical office space.”

To date, GFH has built a portfolio of assets in the US medical office building sector valued at $1 billion.

In December, it acquired a portfolio of medical offices in the US in a deal valued at $200m.

The medical offices portfolio consists of 11 assets with more than 400,000 square feet of space spread across North Carolina, South Carolina, Georgia, Utah, Wisconsin, Ohio and Texas.

The latest portfolio is anchored by investment-grade credit tenancy through Baylor Scott & White (Moody’s Aa3), Texas A&M Health Science Centre (Fitch: AAA), Texas Tech University (Fitch AA+), Memorial Hermann (S&P A+) and Tidal Health (Moody’s Aa3), GFH said.

The assets also offer unique specialisations within their respective submarkets, positioning them for high occupancy and rent growth, it added.

The medical clinics sector has been strong performing and proven to be highly resilient to economic downturns — with 99 per cent rent collection during the Covid-19 pandemic. The sector also benefits from population growth and the ageing US population accompanied by an increase in healthcare expenditure, which accounted for nearly 19 per cent of the US GDP last year, GFH said.

“Ageing populations and growth in outpatient care … continue to make the sector highly recession-resilient and unimpacted by economic cycles. We look forward to working with our partner Big Sky Medical to maximise the value of these assets,” Mr Mustafa said.

GFH’s partnership with Big Sky has resulted in a number of acquisitions totalling nearly $500m in the past six months. This transaction is the third in a series of joint acquisitions.

GFH Financial Group reported a 10 per cent increase in its second-quarter profit as investment banking income and income from co-investments rose as the company continues to boost its portfolio around the globe.

Net profit attributable to shareholders of the bank for the three months to the end of June climbed to $23.06m compared with $20.92m during the same period last year.