Industry Pulse (May 2007)

PALM BEACH GARDENS, Fla. – As this edition of Healthcare Real Estate Insights^™ was going to press, we received notice that Palm Beach Gardens, Fla.-based Rendina Cos. had sold 17 medical office buildings (MOBs) for $288 million to Toledo, Ohio-based Health Care REIT Inc. (NYSE: HCN).Rendina also announced the sale of its affiliated property management group, Paramount Real Estate Services, to Health Care REIT. The sale includes MOBs in 10 states: Alaska, Arizona, California, Florida, Missouri, Nevada, Oklahoma, South Carolina, Tennessee and Texas. Rendina’s 170 hospital and physician partners in the MOBs are to receive “significant” proceeds from the sale, according to a news release from Rendina Cos. The company utilizes what it calls a “distinctive equity program” that allows physician investors to participate in property ownership with no cash investment. According to Rendina officials, the sale is part of a long-term strategic relationship with Health Care REIT. Rendina says it plans to re-invest proceeds from the sale to its core strength of developing MOBs and ancillary healthcare service buildings throughout the country. HREI^™ plans to follow up on this story with more information in next month’s edition.

CHAPEL HILL, N.C. – University of North Carolina (UNC) Hospitals recently announced a potential long-range plan for adding as many as 200 beds and replacing 39 operating rooms at the 708-bed Chapel Hill campus. Such a project could cost up to $350 million, even though officials with UNC Health Care, which oversees UNC Hospitals, have not confirmed any cost estimates. Adding the new beds could take place in either a new patient tower at the Chapel Hill campus or an expansion at a satellite location. UNC Health Care has requested $35 million in state funding for advanced planning for the project. UNC Hospitals recently received state approval for 23 new beds and has submitted a request for another 68 beds. Even if the 68-bed expansion is approved, hospital officials say their facility could need as many as 200 more beds by 2025 because of anticipated growth. Two firms are providing planning services: Cambridge, Mass.-based Tsoi/Kobus & Associates and Portland, Maine-based Stroudwater Associates.

MARBLE FALLS, Texas – Scott & White, a healthcare provider based in Temple, Texas, recently announced plans to join with Lake of the Hills Regional Medical Center to build a new 120-bed hospital in Marble Falls, northwest of Austin. Lake of the Hills is a not-for-profit corporation created by the Llano County Hospital Authority to team with Scott & White in the development and operation of the hospital. Lake of the Hills Regional Medical Center would be the centerpiece of the future Crossroads Regional Medical Campus located on the south side of Marble Falls. The developers of Crossroads – Armand and Molly Biglari and Sam Martin – donated land to the county for the future hospital. Plans call for the future campus to include medical office buildings (MOBs), long-term care services, assisted living facilities and other medical service buildings. The future cost of the hospital was not revealed.

BROKEN ARROW, Okla. – The pending loss of one hospital will most likely lead to the development of a new acute-care facility in Broken Arrow, which is just southeast of Tulsa. Broken Arrow city officials in recent weeks announced preliminary plans for the future hospital, which would be developed by Broken Arrow Medical Facility LLC and operated by Tulsa-based St. John Health System. The two entities are currently in negotiations. City officials have been planning the new hospital since learning late in 2006 that St. Francis Broken Arrow was closing and moving some services to a nearby heart hospital facility. While the size of the new hospital has not been announced, city officials say it could be similar in size to the new 36-bed, 106,000 square foot St. John Owasso that opened recently in Owasso, Okla., just northeast of Tulsa. The population of Broken Arrow, the state’s fifth largest city, is expected to increase 8 percent by 2011. Ground could be broken this year, with construction taking about two years or more.

VIERA, Fla. – After a nearly two-year battle, Rockledge, Fla.-based Health First recently received what is likely to be the final go ahead from the Florida Agency for Health Care Administration (AHCA) to proceed with a new 100-bed, $70 million hospital in Viera, located in the Space Coast region of the state. In issuing its decision, the AHCA overruled the opposition of Health First’s major rival, Wuesthoff Health System, which claims the new hospital will contribute to the already high costs of healthcare in Brevard County. The hospital will be Health First’s fourth in the county, compared to the two owned and operated by Wuesthoff, which could still file an appeal of the latest decision. The future not-for-profit hospital is slated to open in 2010 and would be part of the 50-acre Viera Health Park, which is to include a 75,000 square foot health and fitness center – which is under construction – and an 80,000 square foot medical office building (MOB).

CINCINNATI – TriHealth Inc. of Cincinnati is in the midst of a $270 million building plan that will add plenty of capacity at two hospitals – one in the city and one in the growing suburbs. The first project to be completed will be a $150 million expansion at Bethesda North Hospital in the Cincinnati suburb of Montgomery. The project is slated to open in coming months and will add a total of 135 beds, a seven-story tower and 300,000 square feet of patient-care space. The next biggest TriHealth project is at Good Samaritan Hospital in downtown Cincinnati, where $122 million is being spent over the next three years on a 10-story tower that would add 165,000 square feet. Included will be 21 new patient rooms, a 32-bed surgical care unit, 20 intensive-care rooms, 12 delivery rooms, a 21-bed dialysis unit and two new open-heart operating rooms. The project also means 400 new parking spaces. For both projects, the general is Turner Construction Co. and the architect is HDR Architects.

SAN ANTONIO, Texas – Military personnel returning from Iraq and Afghanistan with severe injuries now have a world-class, state-of-the-art facility in which to rehabilitate. The $50 million Center for Intrepid – National Armed Forces Physical Rehabilitation Center, a four-story, 60,000 square foot facility, recently opened in the Brooke Army Medical Center in San Antonio. The project was funded by donations to the New York-based Intrepid Fallen Heroes Fund and the Fisher Foundation. It includes clinical space, labs, a computer-assisted rehabilitation environment, gait lab, natatorium, athletic facilities and a prosthetic manufacturing facility. The construction manager was Parsippany, N.J.-based Skanska USA Building Inc. and the designer was the SmithGroup, a national architectural firm.

DENVER – Denver-based Catholic Health Initiatives recently announced that it has approved plans and funding for a $500 million replacement for St. Anthony Central Hospital in Denver. The new hospital is to be called St. Anthony West and will be located on 45 acres in the suburb of Lakewood. St. Anthony Central, which opened in 1892, sits on 16 acres on the west side of Denver. A task force is working on redevelopment plans for St. Anthony Central, which will remain in operation until the replacement is complete in 2011. The new hospital, which would have 301 private patient rooms and about 900,000 square feet of space, will start seeing patients when it is partially finished in 2009. The federal government currently owns the 45-acre site, and as of recent weeks the transfer of ownership had yet to take place. The Lakewood City Council has approved the site plan, which includes the development of two MOBs with a total of 250,000 square feet. A groundbreaking on the new hospital is expected to take place in fall 2007. q