For Sale: Harrisburg Medical Office Portfolio | Central PA – OFFERS DUE FEBRUARY 9, 2018

Offers Due: Friday, February 9, 2018

BGL Real Estate Partners has been exclusively retained by ownership to offer for sale the fee-simple interest in two (2) healthcare real estate assets totalling 14,900 rentable square feet (individually the “Property” and collectively the “Properties”). The Properties are strategically located in Harrisburg, PA, one of the fastest growing cities in the state. Harrisburg serves as the state capital, and as a result, The Commonwealth of Pennsylvania and the U.S. government are the largest employers in Harrisburg with nearly 40,000 employees. This heavy concentration of government workers provides job stability and steady income to the area. This offering represents a unique opportunity to acquire two Class “A” net-leased properties that are anchored by creditworthy operators including UPMC Pinnacle (Moody’s rated “A1”), DaVita Healthcare Partners (DHP) (Moody’s rated “Ba2”), and Heartland Dental, LLC, the corporate parent of Dental Care of Harrisburg. Both UPMC Pinnacle and DHP provide corporate guarantees for their respective lease agreements.

The Properties are new construction, built in 2016, and are supported by long term leases that have a combined weighted average lease term of 12.0 years (assuming a sale in June 2018). The Properties will generate a year-1 net operators including UPMC Pinnacle (Moody’s rated “A1”) and DaVita Healthcare Partners (NYSE: DVA) (Moody’s rated “Ba2”). Both UPMC Pinnacle and DHP provide corporate guarantees for their respective lease agreements. DaVita is ranked #181 on the Fortune 500 list and grew profits over 200% during their last fiscal year.

Specialties within the Linglestown Rd. MOB include urgent care and dentistry, and the Sturbridge Dr. MOB is 100% leased by DaVita for dialysis purposes. DaVita self-funded the build-out of the Sturbridge Dr. MOB which demonstrates their long-term commitment to the Property. The urgent care group, All Better Care (ABC), was acquired and its lease assigned to UPMC Pinnacle in September 2017. ABC offers on-site digital x-ray, on-site lab, EKG, on-site pharmacy, orthopaedic care, respiratory therapy, and a number of other specialties. Dental Care of Harrisburg, a division of Heartland Family Dental Care (HFDC), occupies the remaining 46% of the Linglestown Rd. MOB and offers the full range of dental services. Heartland Dental is the largest Dental Support Organization in the US, with over 800 locations in 34 states.

The Properties are strategically located near several medical centers, including UPMC Pinnacle Harrisburg Campus, UPMC Pinnacle Community Hospital, UPMC Pinnacle West Shore which includes the renowned Ortenzio Cancer Center, Geisinger Holy Spirit Hospital, Penn State Health Milton S. Hershey Medical Center, and Penn State Children’s Hospital – Hershey. This proximity to medical centers provides a reliable referral program and improved convenience and satisfaction for patients.

Investment Highlights

  • Premier Facilities: The subject Buildings were built in 2016 and feature the area’s top healthcare providers and specialists for urgent care, dentistry, and dialysis.
  • Medical Corridor: The subject Properties are located in a strong medical corridor which includes other proximate specialties and healthcare providers such as UPMC Pinnacle, gastroenterology, radiology, ophthalmology, cardiology, and family practice among others. The subject Properties’ high visibility in a high traffic healthcare corridor bode well for respective practice financials and will be supportive of occupancy and rents in the future.
  • Well Positioned: The Buildings are well located in Dauphin County approximately 7 miles to the northeast of the City of Harrisburg. Dauphin County is one of the faster growing counties in Central Pennsylvania, and each Building’s respective neighborhood is economically stable with new development occurring at a steady pace.
  • Credit Tenancy: UPMC Pinnacle and DaVita Healthcare Partners (NYSE: DVA) are rated “A1” and “Ba2” by Moody’s, and Heartland Dental is the largest Dental Support Organization in the U.S. DaVita is ranked #181 on the Fortune 500 list and had revenues of over $15 billion and profits of $880 million during their last fiscal year.
  • Corporate Guarantees: UPMC Pinnacle and DaVita provide corporate guarantees for their respective leases, and Heartland Dental, LLC is the corporate entity lessee for the their affiliate, Dental Care of Harrisburg.
  • Growing MSA and Region: Harrisburg, PA is the 96th largest Metropolitan Statistical Area in the country with a population over 570,000 and has grown over 3% since 2010. South Central Pennsylvania has a population over 1.4 million people of the aged 65 and older cohort, 17.3% of the total, is expected to grow by 15.3% over the next 5 years.
  • Health System Consolidation: Harrisburg, PA and surrounding areas have seen significant consolidation in the dominant healthcare providers in the market with UPMC, PinnacleHealth, Penn State Health, and Geisinger making hospital and health system acquisitions and increasing market share. The UPMC Pinnacle merger will enable Pinnacle to hold onto and increase existing market share and will put pressure on Penn State Hershey to increase its health¬care services footprint or risk being diminished. These seismic health system moves will be beneficial for the subject Properties.

Offers Due: Friday, February 9, 2018
View the Executive Summary for more information.
Bypass the online summary and directly execute the Confidentiality Agreement.

Submit questions and offers to: Christopher L. Stai and Allen C. Inman  |  cstai@bglco.com & ainman@bglco.com

 

Christopher L. Stai, CPA | Managing Director
BGL Real Estate Partners
480.433.3494 | cstai@bglco.com

Clinton J. Parker | Managing Director
BGL Real Estate Partners
210.352.5832 | cparker@bglco.com

Andrew R. Larwood | Director
BGL Real Estate Partners
312.658.4756 | alarwood@bglco.com

Allen C. Inman | Director
BGL Real Estate Partners
312.658.4754 | ainman@bglco.com

 

 

 

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