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4/14/21
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The Laguna, a 57.6k sf medical office building in Laguna Hills, was purchased by a publicly traded Real Estate Investment Trust that focuses on owning, managing, acquiring and developing outpatient medical facilities throughout the United States. The sale price was not disclosed.
The property is located at 24022 Calle de la Plata, on the Memorial Care Saddleback Medical Center campus. It was sold by Meridian, who acquired the asset in October 2017.
During its ownership, Meridian invested over $2 mil into the property, fully modernizing the building, which was built in 1983, and brought it up to Class A standards. The work entailed aesthetic upgrades to the common areas including the lobby, hallways, and restrooms and upgrades to building systems including HVAC and lighting, adding fire sprinklers throughout the entire building as well as various other ADA upgrades.
Evan Kovac and Andrew Milne with JLL represented Meridian in the sale.
“When we purchased the asset in 2017, medical office vacancy was approximately 25% in this immediate submarket which scared a lot of other investors away,” said Meridian’s Vice President of Acquisitions, R.J. Sommerdyke. “As we dug deeper, we realized the majority of the vacancy was in a neighboring building that was outdated and therefore had become out of favor with tenants. However, at the time of our acquisition, that building was undergoing a major renovation to reposition the asset. The submarket had very strong fundamentals given its proximity to a major hospital, a great payor mix, and a limited amount of medical office supply. We felt strongly that once the renovations of the neighboring building were completed, there would be significant absorption and vacancy would fall in line with the larger Orange County market (approximately 8%), which is exactly what happened.”
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