The 17 MOBs in the seven-state PHT Portfolio are 96 percent occupied
By John B. Mugford
The portfolio includes the 84,622 square foot Duke Medicine Plaza in Raleigh, N.C. (Photo courtesy of JLL)
CHICAGO – One of the “highest quality, on-campus portfolios ever offered” has changed hands, with Chicago-based Heitman LLC purchasing 17 medical office buildings (MOBs) totaling 1.4 million square feet, according to a Feb. 16 Heitman news release.
While the price was not disclosed, the Real Estate Alert newsletter projected in November 2017 that the portfolio would fetch about $600 million. A more conservative estimate would have it totaling nearly $440 million – a figure based on the average price per square foot (PSF) of $314 paid for MOBs in 2017, according to real estate research firm Real Capital Analytics (RCA) Inc.
The seller of the so-called PHT Portfolio was the real estate investment advisory firm Bentall Kennedy, on behalf of a an undisclosed state pension fund. However, it is common knowledge in healthcare real estate (HRE) circles that the seller is PHT Investment Holdings Inc., which is affiliated with the State of Michigan Retirement Systems.
Denver-based NexCore Group LP, a long-time healthcare real estate development and full-service firm, advised Heitman during the acquisition and will manage and lease the properties for the real estate management firm.
It was Mindy Berman, managing director of the Healthcare Capital Markets Group of Chicago-based Jones Lang LaSalle (NYSE: JLL), who called the portfolio the “highest quality, on-campus MOB portfolio ever offered.” Ms. Berman and her team marketed the portfolio and represented Bentall Kennedy in the transaction.
Ms. Berman did not disclose the price, but noted, “Suffice it to say, the result was very strong for our client.”
She added that “investor interest was very high from both domestic – private and public sources – as well as foreign capital.”
According to JLL, Bentall Kennedy, which has seven offices in Canada and five in the United States, assembled the portfolio during the past 12 years through new developments and acquisitions. The properties are considered “Class A” facilities of “institutional quality,” according to JLL, and are 96 percent occupied overall.
The portfolio has buildings in seven states, with nearly all of the properties being in top 50 metropolitan statistical areas (MSAs). The average remaining lease term of the 76 tenants in the portfolio is seven years.
Of the 17 buildings, which have an average size of 82,320 square feet, seven are single-tenant buildings while the remaining 10 have multiple tenants. Of those tenants, 77 percent are investment-grade, according to JLL, which adds that the annual net operating income (NOI) for the portfolio is $27 million.
The properties are on campuses operated by these health systems:
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