Lee’s Hill Medical Plaza in Fredericksburg sells for $28 million

Avison Young has arranged the sale of a 72,255-square-foot, Class A-medical office building in Fredericksburg.  The buyer, a medical office REIT, purchased Lee’s Hill Medical Plaza for $28 million, according to a source close to the deal.

The seller was a joint venture partnership between Flagship Healthcare Properties with Drake Real Estate Partners.

According to Avison Young, Flagship and Drake acquired the property in 2014 and increased occupancy by more than 20%, bringing it to 91% at the time of the sale. Tenant additions included the U.S. Department of Veterans Affairs and multiple expansions as well as the long-term lease extension of the hospital anchor tenant, Mary Washington Healthcare System & Radiologic Associates of Fredericksburg.

“The Drake/Flagship joint venture has proven to be a fruitful one. The successful lease-up of the asset has allowed us and our investors to achieve our financial goals and also bring shared value to our tenants and the surrounding community by securing a long-term home for Mary Washington Healthcare in Fredericksburg,” Jonathan Garonce of Drake Real Estate Partners said in a statement.

Leading the Avison Young team was Jim Kornick and Chip Ryan,  principals in the Washington, D.C., office; Mike Wilson and Erik Foster, principals in the Chicago office and Mark Johnson, an executive vice president in the Chicago office.

“This asset represents a very unique opportunity in the national marketplace for a core-plus medical office building,” Wilson said in a statement.  “A Class-A facility with a long-term hospital anchor, along with some vacancy for growth and expansion, is tough to find. That was evident in the very strong buyer activity and aggressive pricing.”

Completed in 2008, Lee’s Hill Medical Plaza sits on five acres at 10401 Spotsylvania Ave. and offers 314 parking spaces.

The property is located off the I-95 interchange with U.S. Route 1, south of downtown Fredericksburg. The property is also near two major hospitals, five miles from Mary Washington Hospital and two and a half miles from HCA Spotsylvania Regional Medical Center.

Flagship Healthcare Properties will be retained as property manager.