HPA Growth Fund

HPA Growth Fund

Levered 13-15%
Cash-on-Cash Projection
Hold Period
5-7 years (plus options for 2 year extension)
Sponsor Co-Investment
5% of Committed Capital
Minimum Investment

Executive Summary

Healthcare Property Advisors, LLC (HPA) is a Southern California-based healthcare real estate operator and manager with national healthcare system relationships focused on investing in quality medical office buildings on or adjacent to national health care systems.

The demand by institutional investors for the recession-resistant medical office building (MOB) asset category has increased drastically in recent years due to the characteristics of this real estate asset class including steady, long-term cash flows, NNN lease rent stability and predictable occupancy patterns driven by the mass aging population and increased need for outpatient care near major hospitals.

Assets we target and acquire as a private real estate company typically exhibit the following three primary attributes:

  1. Assets on or adjacent to major healthcare system hospital campuses.
  2. Long term NNN Leases backed by the health care systems themselves (typically Aa3 investment grade credit)
  3. Assets that we can acquire off-market and below replacement cost, and add value through leveraging our healthcare system relationships to secure long term leases before we close escrow.

The HPA platform is vertically-integrated, with real estate investment, management, and development capabilities with more than 30 years of team experience in the medical/healthcare real estate sector. The company and its affiliates have developed, constructed, or advised on over $6 billion of medical office and currently owns and or manages over two million square feet of healthcare real estate.

Because of the unique ownership structure created by The Innovation Institute model, HPA has a unique competitive advantage in its ability to scale its core-plus and value-add real estate holdings to aggregate a portfolio of stabilized, cash flowing, investment grade credit leased medical office building (MOB) assets that will provide a current cash yield and long term value appreciation for its investors. HPA’s interests are closely aligned with its partners and leadership – the firm’s executives hold equity in the company and are invested in its long-term growth and success.

Recession-resistant asset class:

MOBs with strategic location and investment grade lease structure provides steady, long-term cash flows, rent stability and predictable occupancy patterns. Hence, its recession resistant asset category. HPA will utilize its five national healthcare system partners and affiliate portfolio companies to identify and acquire mission critical out-patient MOB assets located on or adjacent to their healthcare partner hospital campuses. HPA will leverage its relationships with these strategic partners to acquire off-market assets in its proprietary pipeline, rather than acquiring through a typical "market & bid process". Thus, HPA anticipates its MOB acquisition and re-positioning strategy to generate unleveraged returns more than 150-200 basis points (bps) above a core acquisition strategy, with an anticipated current yield of 7%-10% over the life of the investment, and an 13-15%+ leveraged IRR return over the holding period of the portfolio.

Investment Overview

  • Acquire A/B-class Medical Office Building properties located on or adjacent to major healthcare system hospitals, with a focus on outpatient facilities and MOBs suited specifically toward a particular system specialty (i.e. irreplaceable locations).
  • Utilize HPA’s extensive medical office experience combined with its vertically integrated operating platform.
  • Leverage HPA/Innovation Institute’s member-healthcare system relationships for new acquisitions.
  • Target assets where HPA can add value through structuring newly executed/renewed NNN leases, typically secured by healthcare system itself with investment-grade credit.
  • Use the best available fixed-rate, long-term debt for new lease properties, and bridge debt for assets requiring more value-add work upon initial closing. Typical leverage: 65%-70%.
Leveraged IRR 13-15%+
Current Yield 7%-10%
Hold Period 5-7 years 
Sponsor Co-Investment 5% of Committed Capital
Minimum Investment $10,000

Fund – Direct Private Placement Offering for Accredited Investors and Institutions

5% of committed capital

  • Asset Management Fee: 1.5%
  • Preferred return of 7%
  • Incentive Fee/Promote: 80% of cash flow to LPs and 20% of cash flow to HPA after cumulative preferred return of 7%
  • Acquisition period of 24-36 months.
  • Average Hold period 5-7 years per asset.
  • If Fund vehicle, term expires five years after final investment placed into service. Option of two 2-year extensions.