Firm teams with MBRE in acquiring MOBs and cancer centers in Greater Buffalo
By John B. Mugford
This building at 3085 Harlem Road in Cheektowaga, N.Y., was part of a four-building portfolio recently acquired by Ciminelli Real Estate Corp. and MB Real Estate. (Photo courtesy of H2C)
Buffalo, N.Y.-based Ciminelli Real Estate Corp. recently acted upon an opportunity to acquire four medical office buildings (MOBs) with cancer centers throughout its hometown’s metropolitan area.
The company, well-known in the pages of Healthcare Real Estate Insights™ for developing the 350,000 square foot, $100-plus million Conventus building on the multi-provider Buffalo Niagara Medical Campus, teamed with joint venture (JV) partner MB Real Estate of Chicago in acquiring the four buildings for an undisclosed price.
(For more on the Conventus development, please see “Big bucks in Buffalo” in the August 2013 edition of HREI™.)
Acting as the financial advisor to Ciminelli on the recent acquisition, as well as the formation of the JV partnership, was a team from New York-based Hammond Hanlon Camp LLC (H2C) led by Jay J. Miele, managing director with the firm. H2C led a competitive process to find the JV partner, MB Real Estate.
The portfolio has more than 170,000 square feet of what H2C calls “Class A clinical medical office, urology, radiology and cancer center space” throughout the western New York cities of Orchard Park, Cambria, Cheektowaga and Jamestown. Included in the buildings’ cancer centers are six linear accelerator vaults. Also offered are outpatient urology procedures and laboratory and imaging services that include MRI, CT scan, ultrasound and X-ray.
Each property is subject to a long-term lease with Buffalo-based Kaleida Health, the largest health system in western New York and the operator of Buffalo General Hospital on the Buffalo Niagara campus.
According to Mr. Miele of H2C, the leaseback of space by Kaleida came after the health system acquired physician groups occupying a majority of the space in the portfolio: Western New York Urology Associates LLC and Cancer Care of Western New York.
He adds that physicians with Western New York Urology Associates sold the assets and were the majority tenants in all of the buildings.
“This wasn’t a typical monetization since Kaleida didn’t own the assets prior to the sale,” Mr. Miele tells HREI™. “Instead of Kaleida acquiring the real estate along with the practice, they acquired just the practice and signed a lease for the real estate and then allowed the current owners to sell the assets subject to their new leaseback.”
H2C, led by Mr. Miele, also advised Ciminelli on the development of Conventus, helping land a financial partner in White Plains, N.Y.-based Seavest Healthcare Properties LLC.
In a statement from Ciminelli, Paul F. Ciminelli, president and CEO, said: “Having worked with the H2C team in the past, we felt confident they would secure the most appropriate partner for Ciminelli while achieving the goals of Kaleida and other key parties in the transaction. They exceeded our expectations and ensured the successful execution of a complicated transaction in an expedited timeframe.”
As part of the JV that owns the portfolio, Ciminelli is providing property management services for the buildings.
More advisory work
In more news from H2C, the company recently advised Lavonia, Ga.-based Ty Cobb Regional Medical Center on the recent sale of its 56-bed hospital to Athens, Ga.-based St. Mary’s Health Care System Inc. The system is part of Livonia, Mich.-based Trinity Health.
The hospital in Lavonia has been renamed St. Mary’s Sacred Heart Hospital.
“This is a banner day for Franklin, Hart and Stephens counties, and for all of Northeast Georgia,” said Diane Toney, chair of the newly-formed Sacred Heart Hospital Board of Directors, in a statement. “St. Mary’s is one of the most highly respected, multi-hospital systems in Georgia. They bring unprecedented levels of quality, best practices, supply system leverage and financial stability to healthcare in our community. Our hospital is in good hands.”
H2C was hired in May 2014 to assist Ty Cobb Regional as it faced financial challenges as a rural healthcare provider in a state that has not expanded Medicaid.
H2C executed a “broad, competitive process to maximize value to existing stakeholders and ensure that the hospital would be well positioned to continue providing healthcare to the communities it serves in Northeast Georgia.”
Once St. Mary’s was selected, H2C assisted Ty Cobb in negotiating and finalizing the terms of the sale.
“H2C was instrumental in running a competitive process, reaching out to a broad universe of potential partners,” said Greg Hearn, former CEO of Ty Cobb.
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