GFH acquires US medical offices portfolio in $200m deal

GFH Financial Group, an investment bank based in Bahrain, has acquired a portfolio of medical offices in the US in a deal valued at $200 million, expanding its real estate portfolio in the world's largest economy.

The medical offices portfolio consists of 11 assets with more than 400,000 square feet of space and is spread across North Carolina, South Carolina, Georgia, Utah, Wisconsin, Ohio and Texas, the company said in a statement on Tuesday. The Sharia-compliant deal brings the value of the GFH group’s US healthcare portfolio to over $400 million.

Medical offices refers to facilities leased to outpatient medical and related services. These include different specialisations of medicine, labs and ancillary medical services.

“The pandemic has underlined a need for more outpatient services and continued demand for healthcare services. As a result we are seeing strong investor sentiment in the medical offices sector,” said Nael Mustafa, co-chief investment officer — real estate, at GFH.

“This trend is particularly true in the US, where healthcare spending comprises around 18 per cent of [gross domestic product], compared to around 10 per cent for most other developed countries.”

Investment in medical offices has quadrupled over the last decade and medical office closings accounted for nearly 30 per cent of all US office sales for the year ending in March 2021, GFH said without citing sources.

Some of the assets that GFH acquired are leased to major healthcare operators such as Cleveland Clinic, Texas A&M Health Science Centre, Novant Health, Spartanbrug Regional Healthcare System, Texas Health Resources and Baylor Scott & White Health.

These buildings are positioned on hospital campuses or near hospitals, allowing it to tap into the sector, the company said. GFH is boosting its investments in the US in a bid to tap into post-pandemic opportunities.

Earlier this year, it acquired a $100m student housing portfolio affiliated with several top universities in the US as part of its expansion plans. The company acquired a residential tower in Baltimore in a joint venture with Broadshore Capital Partners for $90m in October. In November, it leased 14 logistics assets to Amazon in the US. GFH also bought a US warehousing and distribution logistics centre for $100m in June.

The investment bank more than doubled its net profit on an annual basis for the third quarter of 2021, underpinned by a strong performance in the group's business lines.

Net profit attributable to the shareholders of the bank in the three months to September 30 surged by 187.3 per cent to $23.3m, from $8.1m in the third quarter of last year.