Transactions: Griffin-American hits $1 billion in value

RECENT ACQUISITIONS ENABLE UNLISTED REIT TO REACH INVESTMENT MILESTONE

By John Mugford

One of Griffin-American’s recent acquisitions was the 51,280 square foot Main Street Medical Plaza in Frisco, Texas, which it acquired from Caddis Partners for a reported $14.6 million. Caddis acquired the MOB in 2009.
Photo courtesy of Caddis Partners

Showing that it is willing to acquire a variety of healthcare real estate property types, Newport Beach, Calif.-based Griffin-American Healthcare REIT II Inc. recently completed acquisitions of three Los Angeles area hospitals and three MOBs in Texas and Georgia.

The unlisted REIT paid a total of $108.7 million for the properties, increasing the total value of its healthcare real estate portfolio about $1.1 billion based on purchase price.

The REIT, which is sponsored by American Healthcare Investors and Griffin Capital Corp., has increased the size of its portfolio by 149 percent since the start of 2012.

“Reaching the $1 billion mark in aggregate portfolio value, based on purchase price, is a key milestone for Griffin-American Healthcare REIT II,” said Danny Prosky, a principal of American Healthcare Investors and president and chief operating officer of the REIT, in a statement.

“Size and scale can be very important in terms of real estate portfolio operations, efficiency and potential enhanced value of the REIT as a whole. The REIT has now grown to the size where it is one of the largest and most significant owners of healthcare-related real estate in the country.”

The hospital acquisitions include East Los Angeles Doctors Hospital, Memorial Hospital of Gardena and Coast Plaza Hospital in Norwalk. Griffin-American bought the properties from Avanti Hospitals LLC of El Segundo. The hospitals have a total of 416 beds across three campuses and 296,000 square feet of clinical space.

Each of the hospitals is master leased to operating affiliates of Avanti Hospitals LLC, under a 15-year absolute net lease with two 10-year renewal options.

As for the three newly acquired MOBs, here’s a closer look:

• Main Street Medical Plaza, a two-story facility at 5858 Main St. in the Dallas suburb of Frisco. It has 51,280 square feet of space and is 94 percent leased to multiple tenants, the largest of which is Arlington-based Texas Health Resources. The MOB is adjacent to the newly constructed Forest Park Medical Center Frisco, a 50-bed hospital. The REIT acquired the building from Dallas-based Caddis Partners, which was represented by Cain Brothers & Co. LLC. Griffin-American financed the acquisition using $14.6 million in borrowings under its unsecured line of credit with Bank of America NA, and paid the remaining amount with cash on hand. Caddis acquired the MOB in 2009.
• Mountainside Medical Building I and II, MOBs in Jasper, Ga., with a total of about 37,000 square feet of space. They are on the campus of the 42-bed Piedmont Mountainside Hospital and are 100 percent leased to multiple tenants, the largest of which is the adjacent hospital. Griffin-American Healthcare REIT II acquired neighboring the Mountainside Medical Building III in August. The seller was Chicago-based Ziegler Healthcare Real Estate Fund II, which was represented by Chris Bodnar and Lee Asher of CBRE Inc. (NYSE: CBG) The REIT financed the acquisition through the assumption of an existing mortgage in the amount of about $6.3 million and paid the remaining amount with cash on hand.