News Release: H2C Advises Health System on $135 Million of Real Estate Acquisitions

NEW YORK — Nov. 3, 2020 Hammond Hanlon Camp LLC (“H2C”), a healthcare-focused investment banking firm, served as the exclusive real estate and financial advisor to a nationally recognized, not-for-profit health system based in the Midwest (“System”) in connection with its $135 million acquisition of seven medical office buildings (“MOB”) throughout its primary market area.

The System engaged H2C in 2019 to evaluate a portfolio of over 30 leased properties, many of which were nearing deadlines at which time the System would have the opportunity to extend leases or exercise purchase options through right-of-first-refusal (“ROFR”) and/or right-of-first-offer provisions. As part of its engagement, H2C reviewed the System’s joint venture with a privately held healthcare development firm—the developer of seven MOBs for the System, of which the System and its development partner jointly owned four.

“This transaction allowed the System to gain full ownership of almost a half million square feet across seven MOBs which are strategic assets, while significantly lowering its overall cost of occupancy,” said Philip J. Camp, Principal, H2C. The System utilized its strong credit profile to finance the acquisition at historically-low interest rates through bond financing. “The market in which the System operates has seen robust growth, which has led to rapidly rising lease rates. The System took a forward-thinking approach to acquire these strategic assets now before rental rate increases would make them more costly to occupy,” added Matthew T. Tarpley, Vice President, H2C.

H2C is finding that more and more health systems are taking a proactive approach in optimizing their leased and owned real estate portfolios. By acquiring leased properties, health systems are able to consolidate from other leased space, mitigate future lease liabilities, and avoid paying real estate taxes, depending on the local and state regulations. The potential savings is compounded by financing acquisitions through traditional debt sources or bond financing at historically low interest rates, sometimes with rates equating to the annual escalation of rent increases due to today’s capital markets environment.

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About Hammond Hanlon Camp LLC (“H2C”)

H2C is an independent strategic advisory and investment banking firm committed to providing superior advice as a trusted advisor to healthcare organizations throughout the United States. H2C’s professionals have a long track record of success in healthcare mergers and acquisitions, capital markets, real estate, and restructuring transactions, acting as lead advisor on hundreds of transactions representing billions of dollars in value. H2C offers securities through its wholly owned subsidiary, H2C Securities Inc., member FINRA/SIPC. For more information, visit h2c.com.

MEDIA CONTACT

Kelly T. Duong
Hammond Hanlon Camp LLC
858.242.4810
kduong@h2c.com

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