Outpatient Projects (Febuary 2006)

Windrose completes Houston projects

Windrose completes Houston projects

REIT’s subsidiary finishes two-facility, $57 million development in Bellaire, Texas

By John Mugford

Windrose Medical Properties Trust (NYSE: WRS) recently completed the development of a two-facility, $57 million medical development in the Houston area: the 64-bed Foundation Surgical Hospital and the 103,000 square foot Foundation Medical Tower, a medical office building (MOB).

Both projects are located in Bellaire, Texas, and were developed by Windrose’s development subsidiary, Hospital Affiliates Development Corporation (HADC).

The Foundation Surgical Hospital is a $33.2 million (not including equipment), 126,000 square foot specialty hospital focused on orthopedics and neurology with an adjoining two-level parking structure. The property is 100 percent occupied, as the hospital has entered an 18-year lease for the facility, which has 10 operating rooms. The land underneath the hospital is owned by a partnership of the physician owners of the hospital and Windrose.

The $23.7 million MOB, called Foundation Medical Tower, has 20 built-out tenant suites and a six-level parking structure. The building is 90 percent occupied. Windrose is self-managing the building, including providing on-going leasing activity.

With the completion of the development, Windrose officers say the company added $386 million worth of income-producing assets in 2005.

Included in those newly added assets is a 22-property portfolio that Windrose acquired for about $241 million late in the year from various limited partnerships of Palm Beach Gardens, Fla.-based Rendina Cos. The company’s acquisitions and developments in 2005 more than doubled the size of its income-producing portfolio to more than $683 million.

Memphis MOB

market seeing

bit of a boom

MEMPHIS, Tenn. – As is the case in most large cities across the country, the MOB market is taking off in Memphis. In fact, as the general office market has floundered since 2001 (actually, the sector is showing some signs of improvement, according to commercial real estate developers and brokers), the MOB sector has been a bright spot.

Not only are MOBs being developed on hospital campuses, but health systems, physician groups and developers are building MOBs in off-campus locations in order to be closer to their patients. In Memphis, a medical office corridor has emerged along the Wolf River, north of downtown.

For example, Memphis-based Weston Cos. is developing a 90,000 square foot medical office project, Lakepoint Plaza, on the site of a former Wal-Mart store in the Wolf River corridor.

Another Memphis developer, Landstone Medical Properties LLC, is having success at its 10.2-acre The Medical Center at Wolf River. The company recently completed the second MOB on the site and subsequently announced plans for the third and final MOB on the campus, which it plans to launch this coming spring.

The second building moved to a 95 percent occupancy rate when Landstone signed a major tenant, Memphis Gastroenterology Group, to occupy 30,000 square feet of the 52,000 square foot building. The first building on the complex, with 55,000 square feet, is 100 percent occupied.

The third and final building is planned as a 41,000 square foot MOB, and Landstone officials report they are in negotiations with a tenant that would occupy about 37 percent of the facility.

Like in many cities, physicians and physicians’ groups in Memphis are getting the opportunity to invest in the ownership of medical office space, both in the form of buying their own medical office condos or sharing ownership in an MOB. Landstone officials say that is the case with most of their MOB developments.

DASCO to build

two MOBs at

Idaho hospital

W. PALM BEACH GARDENS, Fla. – DASCO Cos. recently announced the development of two new MOBs with a total of 92,000 square feet on the campus of Portneuf Medical Center (PMC) in Pocatello, Idaho. The larger of the two MOBs will be the Heart and Vascular Center of Excellence.

The DASCO-developed MOBs are part of a larger expansion plan at Portneuf, a 231-bed facility currently located on two campuses. As part of the expansion plan, the hospital will eventually have one campus with well-defined centers of excellence. Construction is expected to take place in phases over the next eight to 10 years.

DASCO’s development plan for the larger, four-story MOB incorporates a covered patient drop-off with a direct connection to the hospital. The second, single-story MOB features exterior entrances to offices. DASCO will be responsible for all phases of the project, including design and construction oversight, financing, leasing and property management.

In other news from DASCO, the company says it recently assumed management responsibility for 16 properties owned by Orlando, Fla.-based CNL Retirement Properties Inc. At more than half million square feet, the portfolio was acquired by CNL in the spring of 2004. Prior to the deal with DASCO, the properties were managed by a variety companies throughout the country.

For The Record

The Simon-Williamson Clinic PC of Birmingham, Ala., a doctors’ group, recently broke ground on a future $16 million, 100,000 square foot multi-specialty clinic on the campus of Baptist Medical Center Princeton. Slated for completion in the spring of 2007, the three-story project is being built by Birmingham-based Brasfield & Gorrie LLC. Nashville-based Gresham Smith & Partners, which has an office in Birmingham, designed the project… Austin, Texas-based G2 Development is building a 10,000 square foot MOB near the University of Texas Southwestern Medical Center at Dallas, Parkland, and Children’s Hospital… Daimler Group Inc. of Columbus, Ohio, has announced plans to redevelop a former Italian restaurant site in the suburb of Whitehall into a 33,500 square foot MOB. The $3.3 million project would be owned in a partnership composed of the Daimler Group, physicians and America’s Urgent Care… The Department of Veterans Affairs (VA) is reportedly planning a new 30,000 square foot outpatient clinic in the Harlingen area of far southern Texas. The clinic is planned for land owned by the University of Texas Health Science Center. The building would replace the current clinic, which has 10,000 square feet of space. A vocal group of veterans in the area, however, have protested the plans, saying the area needs a new VA hospital instead of an expanded outpatient clinic… Southern Maine Medical Center of Biddefore, Maine, is hoping to begin work this spring on a $15 million, 60,000 square foot MOB on its 48-acre campus. The three-story building, which still needs city approval, would be the second-largest structure on the hospital grounds. In addition to providing space for staff members currently working in the hospital, the MOB would have about 7,000 square feet for occupational therapy and rehabilitation services. q