Firm teamed with JV partner Carlyle to acquire three MOBs in two markets
By John B. Mugford
Anchor Health Properties, which had a big year for acquisitions in 2018, is off to a fast start in 2019.
The Charlottesville, Va..-based healthcare real estate (HRE) investor, developer and manager acquired a total of three medical office buildings (MOBs) in the Seattle and Phoenix markets in January.
Anchor had entered the Greater Seattle market in October 2018 with its first acquisition there. Then, in January, Anchor and its frequent co-investor, Washington, D.C.-based The Carlyle Group, added the two-MOB Doctors Clinic Portfolio with a total of 51,038 square feet in Silverdale, Wash., which is west of Seattle on the other side of Puget Sound.
The sale price and seller were not disclosed. But, according to data from the commercial real estate data firm Real Capital Analytics Inc. (RCA), the Anchor/Carlyle joint venture (JV) paid $17.6 million, or $336 per square foot (PSF) for the two-building portfolio, with an allocated capitalization (cap) rate of 6.2 percent. The seller was Bremerton, Wash.-based Viewmont Properties, RCA says.
Representing the seller were two teams with Los Angeles-based CBRE Group Inc. (NYSE: CBG), which acted as the seller’s exclusive advisors. The teams were the CBRE U.S. Healthcare Capital Markets group of Chris Bodnar, Lee Asher, Shane Seitz, Ryan Lindsley and Sabrina Solomiany, along with Paul Carr, Steve Perovich and Marcus Yamamoto of the CBRE Puget Sound Healthcare Properties.
CBRE says that the Doctors Clinic Portfolio consists of one three-story, 38,582 square foot MOB built in 2006 and one two-story, 12,456 square foot MOB built in 1990. The properties are about one-half a mile apart in Silverdale, about 23 miles west of downtown Seattle.
The portfolio is fully leased, with 82.5 percent rented to Franciscan Medical Group, a wholly owned and operated subsidiary of Catholic Health Initiatives (CHI) and CHI Franciscan Health, CBRE says. Morgan Stanley leases the rest of the space.
The Anchor/Carlyle JV’s entrée to the Seattle market was last fall’s acquisition of the three-story, 86,146 square foot Woodlands MOB at 1909 214th St. S.E. in the suburb of Bothell, Wash. In that deal, RCA says, Anchor paid $31.5 million for what it calls a “best-in-class outpatient facility” housing a variety of primary care and specialist medical services.
The Woodlands MOB is anchored by Renton, Wash.-based Pacific Medical Centers, part of Providence St. Joseph Health.
NKF Capital Markets represented the seller, Bothell-based SteelWave, a Foster City, Calif.-based equity fund.
Anchor’s chief investment officer, James Schmid, tells Healthcare Real Estate Insights™ that the acquisitions have made the Seattle area “a priority focus location” for the company.
Anchor enters the Phoenix market
Greater Phoenix is another new market for Anchor. In another JV with The Carlyle Group, Anchor entered the market in January with the purchase of a one-story, 88,400 square foot “institutional-quality outpatient medical center” in Sun City, Ariz.
According to RCA, the sale price for La Ronde Medical Centre was $25.1 million, or about $235 PSF, with a quoted cap rate of 6.4 percent.
Like the Silverdale deal, the Sun City transaction was also brokered by CBRE’s U.S. Healthcare Capital Markets team, this time in partnership with Andrew Fosberg and Dylan Brown of CBRE’s Phoenix office.
CBRE says that the seller was Sun City Development Group LLC, led by Colin Brown with privately held Whiteboard Development Company, a Phoenix-based development, acquisition and redevelopment firm. RCA also lists a JV partner: BDPEC Medical Properties.
Located in the heart of a high-density retirement community, La Ronde Medical Centre was built in 1972 as a retail center. It was repurposed to 100 percent medical use in 2015-16, earning it the “Medical Redevelopment of the Year” award in 2016 from the local chapter of the National Association of Industrial and Office Properties (NAIOP).
CBRE says that Whiteboard Development invested more than $7.1 million in the facility, which is about a mile from the 501-bed Banner Boswell Medical Center.
“The seller injected a significant amount of capital into this asset over the last couple of years and has successfully repositioned the property into a vibrant outpatient medical center,” CBRE’s Mr. Bodnar said in a news release. “Approximately 60 percent of the property is anchored by two well-established surgery centers which drove significant demand by both institutional and private capital investors focused on healthcare real estate.”
CBRE adds that La Ronde Medical Centre is 90.3 percent leased.
Anchor also closed a deal in Greenville, N.C.
Anchor’s Seattle and Phoenix area acquisitions came on the heels of another closing at the tail end of 2018.
In that deal, the Anchor/Carlyle JV acquired a three-story, 80,000 square foot, off-campus facility on 6.52-acres at 1025 Verdae Blvd. in Greenville, S.C., in a sale-leaseback transaction from Greenville-based Internal Medicine Associates (IMA), a multispecialty medical practice with 29 physicians.
The other tenant in the fully occupied MOB is Greenville Health System (GHS), which has eight hospitals and more than 100 outpatient locations in upstate South Carolina.
The “Class A” facility, as Anchor refers to it, is about 6.2 miles west of downtown and a couple of miles from Greenville Health System’s Patewood Memorial Hospital.
The price was not disclosed. However, Mr. Schmid tells HREI™ that the company has also structured a “capital solution” for the potential purchase of an adjacent, under-construction 60,000 MOB scheduled for completion by IMA this coming March.
RCA indicates that the sale price for the 1025 Verdae Blvd. building was an estimated $32.5 million. And industry sources tell us that the cost construct a new, Class A MOB such as the one under construction on Verdae Boulevard would likely be about $400 PSF, meaning the total cost of that facility would be about $24 million. So HREI™ reckons that the total deal, for both phases, would likely top $50 million.
“This is a great property with two excellent tenants, and that was reflected in the strong demand shown in the property from a number of institutional investors and REITs,” Mr. Schmid notes. “It was very important for the seller to close the sale of the first building before the end of the year (2018), and we were able to close in six weeks.”
According to Anchor, the MOB serves as a “mission critical outpatient” site for GHS’s Patewood Memorial Hospital campus, which has a number of MOBs that are filled to capacity. The outpatient campus also serves as the flagship location for IMA.
Anchor will provide both asset and property management services for the campus; the new deal brings its portfolio to more than 4 million square feet of owned and managed MOBs.
Marketing the property and representing the seller was Peter Couchell of Greenville-based NAI Earle Furman. McLean, Va.-based Capital One provided secured debt financing for the acquisition. ❒
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