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Little Rock developer Flake, partners invest in medical sites

by Andrew Moreau | September 20, 2022 at 3:04 a.m.
John Flake is shown in this photo.

Little Rock real estate developer John Flake and two partners have formed a limited liability company to acquire and develop medical office properties in Arkansas and surrounding states.

The new firm, Global Medical Office Properties, is building a 24,000-square-foot medical office facility in Fayetteville in partnership with local doctors. The group also is reviewing potential acquisitions of medical facilities in Missouri and Tennessee. The company, Flake said Monday, will rely on institutional and private funding.

"When the company begins, we hope to have about $100 million committed," Flake said.

Flake is collaborating with Dr. Bruce Murphy, chairman and chief executive of the Arkansas Heart Hospital in Little Rock, and Tyler Wilson, a Northwest Arkansas developer and former Razorbacks quarterback, to form the new entity. Flake and Murphy have purchased office properties near the Heart Hospital, and Flake and Wilson are partners in Cirrus Investments CRE of Little Rock.

In about six weeks, Global Medical Office will open its first property in Fayetteville along Interstate 49, a two-story facility that will house doctors' offices, Flake said Monday. "We'll have that building open soon, and we're also evaluating acquiring other medical properties in Missouri and Tennessee," he said.

Medical office buildings have become hot properties since the pandemic, boosted by growth in health care employment and projections that spending in the health care sector will continue to increase in coming years as well, according to a second-quarter market analysis conducted by Brown Gibbons Lang & Co., a global investment banking firm based in Cleveland that covers the industry.

Price per square foot for medical properties is up 20% year over year, the analysis found.

"The resilience of the industry and its solid underlying fundamentals have further spurred investor interest in healthcare real estate," the report said. "As a result, medical office buildings and ambulatory surgical centers are emerging as the most attractive assets within the industry."

The Global Medical team is interested in expansions across the southeast, said Wilson, president of Cirrus Investments, which he owns along with Flake. "We are pursuing medical-related real estate investment opportunities," he said.

Cirrus has development projects under construction in the northeast and northwest corners of the state, Wilson said, adding that the company has about 10 projects under way across the region.

Brown Gibbons noted the medical office sector will continue to benefit from emerging health care trends.

"We remain confident in the overall growth of the healthcare real estate sector as well as the compelling investment qualities of this asset class, particularly its long-term leases and stable tenants," the report said. "The aging population and the transition to community-based outpatient treatment will continue to lead to a significant increase in the demand for medical office space."

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