NorthBay Health has completed a roughly $250 million real estate transaction with HealthCore Foundation covering 11 medical properties across Fairfield, Vacaville and Napa, and the health system says it will now pour $42.5 million into expanding clinics, physical therapy space and building systems at those sites. The deal, the third between the two organizations, hands HealthCore ownership of the buildings while NorthBay stays put as a tenant under a 10-year master lease with options for continued occupancy or eventual ownership down the line.
The transaction totals approximately 391,500 square feet spread across eight properties in Fairfield, two in Vacaville and one in Napa, according to financialcontent.com. HealthCore, a Denver-based nonprofit focused on healthcare and education real estate, acquired 10 of the buildings from third-party landlords, while the remaining property came through NorthBay itself. Among the sellers was Ventas, which had notified NorthBay over the summer of its plans to sell six buildings the health system occupies, according to the Press Democrat.
Where the $42.5 Million Is Headed
Per the Press Democrat's reporting, NorthBay has earmarked the $42.5 million for tenant improvements and expansion across all 11 Solano and Napa County properties, with work expected to wrap within 18 months. The plans include enlarging outpatient clinic space at 4520 Business Center Drive, 1860 Pennsylvania Ave. and 2500 Hilborn Road in Fairfield, as well as at 1010 Nut Tree Road in Vacaville. Physical therapy space at 2480 Hilborn Road is slated to double, and 360 Campus Lane in Fairfield will see more room carved out for human resources, information technology and other administrative functions.
Other upgrades on the list include new signage, heating and air conditioning systems, and building controls, the Press Democrat reports. NorthBay also says it could gain additional space at 3273 Claremont Way in Napa and at 2470 and 2480 Hilborn Road in Fairfield as existing tenants move out, though the health system has not specified how much clinical space that might free up or what services would eventually fill it.
Why NorthBay Says the Math Works
NorthBay projects the arrangement will cut its clinical-space occupancy costs by more than $40 million over the next decade, a figure confirmed by financialcontent.com's account of the deal. The health system frames its three HealthCore transactions together as delivering a lower cost of capital and the option to buy properties later at predetermined prices — a hedge, NorthBay says, against future increases in property values. Neither NorthBay nor HealthCore has released the underlying savings calculation or a comparison against previous occupancy expenses, per the Press Democrat.
Mark Behl said the transaction supports long-term growth across Solano and Napa counties while helping manage costs and direct more resources toward patient care, according to the Press Democrat's reporting. Joe D'Angina added that the partnership allows for strategic facility investment, outpatient expansion and bringing services closer to patients. Cyd Petre said nonprofit ownership can reduce property taxes and lower the financing and ownership costs passed on to NorthBay, and argued that health systems should not have to choose between needed facility investment and financial flexibility — though Petre did not provide comparative interest rates for conventional property financing, per the same account.
How the Bonds Actually Work
The financing runs through tax-exempt revenue bonds rather than direct government spending. Solano County supervisors authorized California Municipal Finance Authority revenue bonds of up to $250.6 million covering 10 Fairfield and Vacaville properties, according to dailyrepublic.com. That outlet reports the bonds were privately placed with an institutional investor, with Raymond James serving as placement agent; Raymond James declined to comment when asked about the deal.
Separately, a Napa public notice proposed up to $14 million in bonds for acquiring, rehabilitating and equipping a medical outpatient and urgent care building at 3273 Claremont Way, according to a City of Napa notice. Crucially, those bonds are limited obligations of the California Municipal Finance Authority payable only from pledged revenues — lease payments from NorthBay service the debt, and the bonds do not constitute debt of Napa County, the City of Napa, Solano County or the state. HealthCore affiliates, not local governments, are responsible for repayment.
A Pattern of Deals Across the North Bay
This is HealthCore's third transaction with NorthBay and, per financialcontent.com, its largest to date. The foundation, founded in 2021 and affiliated with Nexcore Group, says it has now financed 18 properties totaling roughly $402 million in transaction value across six municipal markets nationally. Its foundation lease model, as described on healthcore.org, gives nonprofit healthcare systems access to affordable, tax-exempt financing by acquiring properties and leasing them back under long-term arrangements.
An earlier deal closed in December 2025 involving the 115,000-square-foot VacaValley Wellness Center in Vacaville, with HealthCore arranging $79 million in financing that helped fund cancer treatment expansion, including a new linear accelerator vault NorthBay is now building at 1020 Nut Tree Road. HealthCore estimated that transaction alone would save NorthBay about $6.7 million in occupancy costs, a 10 percent reduction, over the lease term. In a prior move, HealthCore also acquired three Hilborn Road buildings in Fairfield for $43 million after NorthBay sold its 360 Campus Lane office building to the foundation for $25.5 million and exercised purchase rights through HealthCore in a $130 million deal, retaining ownership of 30 surrounding acres where it plans to eventually build a new hospital and medical office building.
The broader push fits into what thereporter.com describes as NorthBay's multiyear, $250 million ambulatory-care expansion program. That's separate from NorthBay's proposed $450 million purchase of Providence's Queen of the Valley Medical Center in Napa, a hospital deal announced in April that remains under review by the California Attorney General's office, with a public meeting scheduled for Nov. 17.
The Industry Pressure Behind the Deal
NorthBay's real estate restructuring comes as hospitals nationwide face rising costs and a shift toward outpatient care. The American Hospital Association reported that total hospital expenses rose 7.5 percent in 2025 while outpatient visits grew 9.8 percent, according to financialcontent.com, which also notes that outpatient volumes are projected to grow nearly three times faster than inpatient care over the coming decade. Compounding the pressure, U.S. nonresidential construction costs climbed an estimated 5.6 percent year over year in the third quarter of 2026, per manilatimes.net.
