Saudi group buys old Northeastern Hospital in Port Richmond

A Saudi Arabian investment group has acquired the old Northeastern Hospital in Port Richmond, illustrating the appetite among Gulf State real estate investors for assets away from city centers.

Arbah Capital, together with an affiliate of Morristown, N.J.-based Hampshire Real Estate Companies that specializes in deals with Persian Gulf-based investors, paid $53 million for a 90% stake in the 230,000-square-foot complex, seller BG Capital said in a release last week.

“The medical sector has remained particularly resilient during the unfortunate COVID-19 pandemic,” Arbah chief executive Mahmood Alkooheji said separately on his firm’s website. “This provides a certain degree of stability for the investment in an increasingly volatile economic climate.”

John Gaghan, whose Philadelphia-based APEX Capital Investments Corp. invests in real estate on behalf of Gulf State businesses, said he was not surprised by the Saudi firm’s interest in the hospital property.

While big state-sponsored funds along the Gulf might focus on high-end properties in city centers — such as the Centre Square office complex that’s owned by a group involving Wafra Inc. of Kuwait — smaller investment groups have long been comfortable with more prosaic assets in farther-flung neighborhoods, Gaghan said.

“A lot of people are familiar with the big sovereign wealth funds, but there are multiple tiers beneath that of smaller institutions and high net worth families that want to invest in the U.S. and are much more willing to look outside primary markets for that type of investment,” he said.

The sale to Arbah includes the 2301 Allegheny Ave. hospital building — originally constructed more than a century ago — as well as an adjacent medical office building at 3261 Tulip St. and a recently constructed fitness center across the street at 3254 Tulip St.

BG, a real estate venture co-owned by luxury watch magnate Daniel Govberg, had acquired the properties from an affiliate of real estate investor Chris Rahn for a total of in $12.3 million in 2017, records show.

The complex had been less than 40% occupied when it was acquired, BG said in its release. After about $30 million in investment by BG and the buildings’ occupants, the complex is now fully leased by tenants including Ambrosia Treatment Center and Temple University Health Systems, BG managing partner Joseph Byrne IV said.

In a separate deal, BG and Hampshire plan to develop a large vacant lot that BG bought for $6.5 million from Rahn directly to the north of the hospital complex at 2201 E. Allegheny Ave., BG said. Those plans are currently being refined but could include new houses or offices, Byrne said.