Transactions (Febuary 2006)

Oakland MOB

on ‘Pill Hill’

fetches $25M

OAKLAND, Calif. – It looks as if a medical office building (MOB) in the Pill Hill neighborhood of Oakland, Calif., is not going to fetch nearly double the investment for the sellers after all.

Compass Grand Associates which purchased Broadway Webster Medical Plaza four years ago for $17.8 million, had put the building on the sale block in September for an initial asking price of $32 million. (Please see “One MOB deal is done, another is afoot in Oakland” in the December 2005 edition of Healthcare Real Estate Insights™.)

The property didn’t fetch quite that much, but Compass Grand still pocketed a tidy profit. In December, Portland-based real estate firm SKB Securities reportedly agreed to pay $25 million to acquire a the 12-story, 97,000 square foot MOB. Colliers International represented the seller.

Officers with SJB, which also owns a 200,000 square foot office building in Oakland and a shopping center in nearby San Leandro, Calif., say their nearly acquired MOB is in a good location. The complex is located across the street from Alta Bates Summit Medical Center and a few blocks from Kaiser Medical Center.

The medical plaza has been close to fully occupied in recent years, but will soon have a vacancy rate of about 20 percent as the result of a pending relocation of a physicians’ group.

The new owner is planning about $900,000 in cosmetic improvements to the building but has chosen to increase its earthquake insurance coverage instead of spending $2 million for a seismic retrofit.

SKB officials say they will likely sell the building within the next five years, possibly as a conversion to office condominiums.

eBay is good

place to find…

a hospital?

HALSTEAD, Kan. – For the past three years, Halstead Hospital in the small town of Halstead, Kan., outside of Wichita, sat nearly vacant, waiting for a buyer/developer to breathe new life into the once bustling “horse and buggy” facility.

During those three years on the sale block, a couple of deals fell through, including bids by a Florida developer and a Kansas real estate firm. The only occupant of the building has been a substance abuse center run by the not-for-profit Valley Hope Association, which purchased the building back in 2003 for $560,000 simply to retain space for its treatment center.

Finally, Valley Hope aligned itself with a Wichita real estate firm, Prudential Dinning-Beard Realtors, which marketed the hospital in a variety of ways, including placing it on the giant Internet auction site, eBay.

The eBay move has proven to be a good one. A Punta Gorda, Fla., developer found Halstead Hospital on the auction site and has entered an agreement to acquire the property for the asking price of $1.9 million – half of its appraised value. The unnamed developer has indicated to local officials that it has no immediate plans for the 265,000 square foot hospital and clinic. But finding niche medical tenants is a possibility, according to local officials.

Valley Hope’s treatment center would remain one of the tenants under terms of the tentative deal with the new owner, according to local officials.

According to a representative of Prudential Dinning-Beard, the eBay listing has proven to be a big success, as there are two or three other potential buyers waiting in the wings if the Florida developer’s bid falls through.

While folks who live in and near Halstead realize that the hospital will most likely never return to its heyday – when the facility employed as many 600 people – many say they are ready to welcome any new upgrade and new jobs.

FOR THE RECORD

Berry Surgery Center LLC, a Chicago-based group of private investors, acquired the two-story, 27,127 square foot Berry Surgery Center on 1.7 acres in Farmington Hills, Mich., for more than $8 million from an undisclosed private medical investment group in Warren, Mich. The MOB is 100 percent leased… Ridgefield Professional Office Complex LLC recently acquired a 205,000 square foot MOB and 50 acres of surrounding land in Ridgefield, Conn., for $7 million. Sean Cahill, Michael Dillon and Greg White of CB Richard Ellis (CBRE) represented the seller, ASML USA… Magnolia Industrial Park LLC of El Cajon, Calif., paid a reported $5.4 million to Shea Medical Offices LLC of Mesa, Ariz., for Shea Corporate Medical Center in Scottsdale, Ariz. The brokers were Ken Elmer, Fred Buck and Ron Schooler of EBS & Associates; Andy Melzer of Grubb & Ellis; and Kerry Shimpf of East County Properties… Marcus & Millichap facilitated the sale of Beltway Medical Plaza, a 10,614-square-foot MOB in Houston. The buyer, seller and purchase price were not disclosed… Colliers International in San Diego recently brokered the sale of the 45,000 square foot, Class A Torrey Hills Family Medical Center in San Diego for $19.7 million. The buyers are Torrey Hills Medical Building LLC (81.1 percent) and Carmel Valley Medical Building LLC (18.9 percent). The seller was Sorrento Hills Marketplace LP… Madison Partners in San Diego recently arranged the sale and financing of 488 E. Valley Pkwy., a four-story, Class A, 72,000 square foot medical facility in Escondido, Calif., for $23 million. The seller was Twenty-Seven MH Inc.; the buyer is Cambra Realty. The MOB is located adjacent to Palomar Medical Center. Madison Partners arranged financing of $17.8 million through GMAC… Matt Tritschler and Hayes Swann of GVA Advantis in Atlanta recently represented Saint Joseph’s Hospital in the sale of its leasehold interest in Doctors Center Four, a 208,546-square-foot, Class A MOB. The building is located on the Saint Joseph’s Hospital campus in Atlanta. San Francisco-based RREEF North America acquired the property on behalf of the RREEF America II Fund. Terms of the sale were not disclosed.q