Companies (May 2007)

Shattuck Hammond to be acquired

MORGAN KEEGAN TO CLOSE ON NEW YORK-BASED INVESTMENT BANK DURING Q2

By John Mugford

Memphis, Tenn.-based Morgan Keegan & Co. Inc. in recent weeks entered an agreement to acquire New York-based Shattuck Hammond Partners LLC, an independent investment banking and financial advisory firm specializing in healthcare services. Morgan Keegan is a regional investment banking firm owned by Regions Financial Corp. (NYSE: RF), one of the 10 largest banks in the United States.

Details of the transaction, which is expected to close in the second quarter of 2007, were not disclosed.

According to news releases from both Shattuck Hammond Partners and Morgan Keegan, Shattuck Hammond will continue to operate as an independent division of Morgan Keegan and will maintain its name and business practices.

Shattuck Hammond, which was founded in 1993, notes in its news release that the merger gives the company a chance to expand its resources, products and services. When the transaction closes, 50-employee Shattuck Hammond will have a stronger capital base, the support of an extensive fixed income sales and trading operation, and access to an institutional and retail sales force, according to company officials.

In addition, Shattuck Hammond says the merger provides the company with the support it needs to grow its business in the investor-owned healthcare real estate sector, where Morgan Keegan provides public equity research, sales and trading, and equity capital-raising capabilities.

Morgan Keegan, which has more than 400 offices and $650 million in equity capital, also provides Shattuck Hammond with the ability to examine new investment banking and financial advisory initiatives, such as the sponsorship of funds that would invest in fast-developing healthcare businesses.

Morgan Keegan officials say that bringing Shattuck Hammond into its fold gives the company a chance to grow its for-profit and not-for-profit healthcare investment banking business, where Shattuck Hammond has a national client base that includes some of the “most prestigious” hospital systems in the country, according to the news release.

In addition to its New York headquarters, Shattuck Hammond has offices in Atlanta, Chicago and San Francisco. In the last 12 years, Shattuck Hammond has completed 160 M&A transactions totaling over $10 billion in value and has raised nearly $13 billion for clients through debt and equity placements.

In recent years, Shattuck Hammond has also been one of the most active investment banks in the area of healthcare real estate. The firm has led the portfolio analysis, marketing and monetization process for numerous sales of non-core assets by hospitals and health systems.

For example, Shattuck Hammond recently orchestrated the sale of a $100 million, 11-building portfolio in Ohio to Lillibridge, a Chicago-based healthcare real estate firm. For more that transaction, please see “Power of two (portfolios)” on Page 1 of the April edition of Healthcare Real Estate Insights™.

Michael B. Hammond, a principal and board member of Shattuck Hammond, will direct the new division’s business operations. Under the agreement, Shattuck Hammond’s 13 principals would join Morgan Keegan as managing directors.

For a company history and other background regarding Shattuck Hammond, please see the Company Profile “More than just real estate” on Page 1 of the October 2003 edition of HREI™.

United Properties

completes renovation

at Minnesota hospital

ST. PAUL, Minn. – Bloomington, Minn.-based United Properties LLC recently completed a renovation of Doctors Professional Building on the campus of United Hospital in St. Paul. United Properties acquired the 81,000 square foot medical office building (MOB) in late 2005 with a goal of upgrading the 1970s building and integrating it into the hospital campus.

United Properties provides construction, property management, leasing and healthcare real estate services – and company officials said in a news release that the project gives the company a chance to do all of those. Nationwide, United Properties has 25 million square feet of office, medical office, industrial, retail and multi-family properties under management.

The eight-story Doctors Professional Building was built in two phases in the 1970s. The recent renovation began in summer 2006 and included the addition of a two-story atrium with a patient pick-up area. Other interior and exterior changes were made, including the building of new elevator lobbies with raised ceiling heights.

Currently, the occupancy is 80 percent, according to United Properties. The building is not only located next to and connected via a tunnel to United Hospital, it is also located near Children’s Hospitals and Clinics of Minnesota.

LifePoint continues

with non-urban,

sole-provider strategy

BRENTWOOD, Tenn. – Brentwood, Tenn.-based LifePoint Hospitals Inc. (Nasdaq: LPNT) recently announced that revenues from continuing operations in Q1 2007 were $669.3 million, up 14.1 percent from the same period a year ago.

Income from continuing operations for Q1 was $37.8 million, or 67 cents per diluted share. That compares with income from continuing operations for the first quarter of 2006 of $34 million, or 61 cents per diluted share. Net income for the quarter was $29.8 million, or 53 cents per diluted share, compared with net income of $38.1 million, or 68 cents per diluted share, for the prior-year period.

During the first quarter of 2007, LifePoint committed to terminate a lease agreement related to Colorado River Medical Center, a 25-bed critical-access hospital in Needles, Calif. As a result of the disposal plan, the company has reflected this hospital as discontinued operations and recognized a first quarter 2007 impairment charge of $7.9 million, net of income taxes, or 14 cents per diluted share.

LifePoint owns and operates 51 non-urban hospitals in 19 states. Of the company’s 51 facilities, 47 are in communities where the company is the sole community hospital provider.

In commenting on the results and the company’s strategy, President and CEO William F. Carpenter III said in a news release: “Our strategy of investing in our communities continues to help us generate excellent financial results for the company and stronger relationships in our markets.”

McCarthy begins

$67 million expansion

in Mission Viejo, Calif.

MISSION VIEJO, Calif. – St. Louis-based McCarthy Building Cos. recently began construction on a $67 million expansion at Mission Hospital in Mission Viejo. The hospital is part of Orange, Calif.-based St. Joseph Health System.

McCarthy is the general contractor on a project that entails the construction of a four-level critical care patient tower that will add 64 private patient rooms to the existing 317-bed hospital tower. The new facility will house 24 medical/surgical beds, 40 ICU beds (20 per floor), diagnostic imaging, nuclear medicine, a linear accelerator, a chapel, and a meditation garden, as well as support and mechanical space. The plan also calls for the construction of a 175-foot-long pedestrian bridge that will connect the new patient tower with the main hospital building.

The timeline calls for 11 months of site work, including the installation of utilities, reconfiguring the current entrance and the parking lot, and razing an existing two-story conference center. Completion is slated for 2009.

The architect on the project is Los Angeles-based RBB Architects Inc.

First Colony Healthcare

to developing LEED

building in Tennessee

BRENTWOOD, Tenn. – First Colony Healthcare LLC of Charlotte, N.C., recently announced that it is pursuing the building of what it says will be the first Leadership in Energy and Environmental Design (LEED)-certified Green Building project in Brentwood, Tenn.

First Colony officials announced the plan at the recent closing of a land acquisition in Westgate Commons, where construction begins in the fall on The Colony at Westgate. The project would compose a 35,000 square foot MOB, a 63,000 square foot conventional office building and an 87-space underground parking garage.

In a news release, First Colony Healthcare’s president, Dennis Norvet, stated: “This emphasis on responsible development is one we plan to apply to all of our future projects.”

The leasing firm on the project is Nashville Commercial/Cushman & Wakefield. The project would be the fifth for First Colony Healthcare, an affiliate of First Colony Corp.

For the Record

Indianapolis-based Duke Realty Corp. (NYSE:DRE) recently announced that it had $105.1 million of developments in the first quarter (Q1) of 2007 – $32 million of which were in the company’s Bremner Duke Healthcare Real Estate division. The medical projects include a 20,000 square foot MOB in Morrisville, N.C., that is 100 percent leased to Duke University; and a 120,000 square foot MOB that is about 50 percent leased in Murfreesboro, Tenn…. The team of HuntonBrady Architects of Orlando, Fla., and Ellenzwieg Associates Inc. of Cambridge, Mass., has been chosen to design a $33 million building at the University of Central Florida’s College of Medicine at the UCF Health Sciences Campus in Lake Nona, Fla. The four-story, 100,000 square foot building is currently in the programming and conceptual design phase. It will house both a medical library and medical instructional spaces and is scheduled for completion in fall 2009… Heart Hospital Baylor Plano (Texas), an all-digital, 68-bed cardiovascular center designed by Chicago-based RTKL Associates Inc., recently opened its doors. The $106 million, 197,000 square foot heart hospital is adjacent to Baylor Regional Medical Center in Plano, which is part of Dallas-based Baylor Health Care System. The bowtie-shaped patient tower is a partnership of Baylor and 86 cardiovascular physicians and surgeons. Additional consultants included Trammell Crow Healthcare Services as program managers, Dallas-based MEDCO Construction Co. as the general contractor and Zinser/Grossman Structural as the structural engineer. q