Los Angeles, CA – May 23, 2016—CBRE Group, Inc., announced today the closing of the first tranche of a multi-state, 52-building medical office portfolio on behalf of Colorado-based Catholic Health Initiatives (CHI) for $324 million. In total, the portfolio, which is expected to close in its entirety by year-end, is valued at approximately $700 million. According to Real Capital Analytics Inc.’s Medical Office Building (MOB) data, which began tracking the medical office sector in 2001, the sale of the full portfolio will mark the largest health system monetization of MOBs on record. Historical data also confirms it will be the largest MOB portfolio to ever trade outside of a merger or acquisition.
The CHI portfolio totals more than 3.1 million rentable square feet across 10 states. Milwaukee-based Physicians Realty Trust (NYSE: DOC) was selected as the buyer and is purchasing the assets in multiple phases. Chris Bodnar and Lee Asher, Executive Vice Presidents and co-founders of CBRE’s U.S. Healthcare Capital Markets team, and Tim Lorman, Alliance Director of CBRE’s Healthcare Services Group, led the transaction on behalf of CHI.
“Like many health systems, Catholic Health Initiatives is taking advantage of favorable market conditions to unlock the capital they have invested in these properties,” said Mr. Bodnar. “This monetization of assets will strengthen operations and enhance the care they provide to the communities they serve.”
“This initiative is part of an overarching strategy by Catholic Health Initiatives to obtain maximum value from their owned and leased real estate assets, while creating a partnership with a reputable investor,” added Mr. Asher. “Physicians Realty Trust plans to own the properties for the long-term, infusing significant capital into the portfolio while providing first-class management services to CHI and their physicians.”
Based in Englewood, Colorado, CHI is a non-profit, faith-based health system formed in 1996 through the consolidation of four Catholic health systems. As one of the nation’s largest health systems, CHI operates 105 hospitals in 19 states with inpatient and outpatient facilities spanning community health-services organizations, accredited nursing colleges and home-health agencies.
The first tranche in the portfolio includes the following 26 properties:
- Blandford MOB, 5 St. Vincent Circle, Little Rock, AR
- Cardwell Professional Building, 1111 W. Frank Avenue, Lufkin, TX
- Dacono Neighborhood Health, 3101 Summit View Drive, Dacono, CO
- Franciscan Health Service & Garage, 1149 Market Street, Tacoma, WA
- Grand Island Specialty Clinic, 908 N. Howard, Grand Island, NE
- Hot Springs Village MOB, 4419 N. Highway 7, Hot Springs Village, AR
- Jewish – Medical Center East, 3920 Dutchmans Lane, Louisville, KY
- Jewish – Medical Center South, 1903 W. Hebron Lane, Shepherdsville, KY
- Jewish – Medical Plaza I, 100 E. Liberty Street, Louisville, KY
- Jewish Hospital Outpatient Care Center, 225 Abraham Flexner Way, Louisville, KY
- KentuckyOne Health Medical Plaza II, 250 E. Liberty Street, Louisville, KY
- Lakeside Three Professional Center, 16929 Frances Street, Omaha, NE
- St. Luke’s Health – Medical Arts Pavilion, 1105 W. Frank Avenue, Lufkin, TX
- Memorial Outpatient Therapy Center, 1301 W. Frank Avenue, Lufkin, TX
- Midlands Two Professional Center, 401 East Gold Coast Road, Papillion, NE
- Parkview Medical Office Condominium, 1 St. Vincent Circle, Little Rock, AR
- Peak One ASC, 350 Peak One Drive, Frisco, CO
- Physician Medical Center, 1624 S. “I” Street, Tacoma, WA
- St. Alexius – Minot Medical Plaza, 2111 Landmark Circle, Minot, ND
- St. Clare Medical Pavilion, 11311 Bridgeport Way, Lakewood, WA
- St. Joseph Medical Pavilion, 1802 S. Yakima Street, Tacoma, WA
- St. Joseph – Office Park Buildings A-C, 1401 Harrodsburg Road, Lexington, KY
- St. Joseph – Office Park Buildings D, 1451 Harrodsburg Road, Lexington, KY
- St. Mary – Caritas Medical II, 1900 Bluegrass Avenue, Louisville, KY
- St. Mary – Caritas Medical III, 4500 Churchman Avenue, Louisville, KY
- Thornton Neighborhood Health Center, 4075 East 128th Avenue, Thornton, CO
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