Transactions: HTA closes three MOBs acquisitions

 

Separate deals in Colorado, Texas and Pennsylvania total about $85 million

By John B. Mugford

Growing Parker, Colo., is in the far southern suburbs of the Denver metropolitan area and was picked this year by  Money magazine as the 12th best place to live in the country.

According to the magazine, the city of about 46,000 people­ – and growing ­– is one of the healthiest places in the United States, and its residents are generally “affluent and well-educated.”

“As a once-rural enclave (Parker) still has a charming ranch vibe with panoramic mountain views and the occasional cowboy hat,” the magazine writes. “Steady growth has encouraged construction, which means relatively low home prices.”

Scottsdale, Ariz.-based Healthcare Trust of America Inc. (NYSE: HTA) recently acquired what seems to be an important piece of the growth and vibrancy of Parker, as it purchased a two-building, 115,362 square foot medical office building (MOB) complex there.

The complex is home to a surgery center, imaging suite, orthopedics, physical therapy, ophthalmology and a number of physician practices.

In addition to the Parker transaction, the publicly traded real estate investment trust (REIT), which focuses on MOBs, has made two other major, separate acquisitions of medical buildings since mid-July.

The others include an MOB outside of Pittsburgh and one near Dallas.

In making the three purchases, HTA paid about $85 million, bringing its total for 2013 to about $179 million.
Here’s a closer look at HTA’s recent MOB transactions:
Lincoln Medical Ctr., Parker, Colo.

According to data from New York-based Real Capital Analytics Inc. (RCA), HTA paid $42 million for Lincoln Medical Center, or about $344 per square foot.

RCA lists the seller of the complex at 11960 Lioness Way in Parker as Development Solutions Group (DSG) LLC, which developed the building and opened it in 2008. The capitalization (cap) rate was 6.9 percent on a pro forma basis, RCA reports.

According to the DSG website, the firm has offices in Denver and Madison, Wis., and its principals include Alan R. Main, president and  CEO;  Andrew E. Shearer, managing director of real estate development; and Kevin B. Fosse, senior VP of real estate development.

The Parker complex is part of an emerging medical area, as it is located next to a physician-owned rehabilitation hospital and is about a mile from HCA-HealthONE Sky Ridge Medical Center.

The 10-year-old hospital, which is part of Denver-based HCA-HealthONE, owned by HCA Holdings Inc., recently started a $117 million expansion to add 90 beds, a women’s center, a new MOB, four operating suites and a parking garage.

HCA and affiliated groups lease about 37 percent of the space in Lincoln Medical Center, which is anchored by a surgery center operated by a joint venture of HCA and physician tenants.

There is a mix of other tenants and specialties offered in the building, including physicians with admitting rights at Parker Adventist Hospital, about four miles to the east.

According to the brokerage firm that marketed the building, the Healthcare Capital Markets Group of CBRE (NYSE: CBG), the MOB complex was 91.7 percent leased at the time of the offering.

CBRE executives working on the sale included Chris Bodnar and Lee Asher of the national healthcare group and Dann Burke in the Denver market.

According to HTA officials, the Parker office/MOB market has a vacancy rate of less than 5 percent. The purchase includes two acres of adjacent land that would allow for an expansion of about 40,000 square feet.

Acquiring the MOB, the third building HTA has purchased from DSG, brings the REIT’s Denver-area portfolio to about 260,000 square feet.
Frisco MOB, Frisco, Texas

In recent days, HTA closed on the $28 million purchase of the 91,000 square foot Frisco MOB on the campus of Forest Park Medical Center Frisco.

HTA says the “Class A” facility, which is attached to the 50-bed, physician-owned hospital, was completed in 2012.

The building was 100 percent leased at the closing.

For HTA, the acquisition is its third from affiliates of the Forest Park system, as earlier this year it closed on separate purchases of two MOBs on the campus of Forest Park Medical Center in Dallas, Forest Park’s original physician-owned hospital. HTA paid about $75.45 million  for those two buildings.

With the latest purchase, HTA’s Texas portfolio now has more than 1.7 million square feet. Officials say the REIT is funding the latest purchase through available liquidity.

In a statement, HTA Chairman and CEO Scott D. Peters said: “Texas continues to be a focus area for HTA. The state’s strong employment growth and a business-friendly regulatory environment helps create a dynamic environment for healthcare providers and their associated real estate.”
MOBs in Monroeville, Pa.

In mid-July, HTA paid $15 million for a two-building, 115,000 square foot multi-tenant, medical office complex in a high-traffic retail area of Monroeville, outside of Pittsburgh. The two-building complex at 4055 and 4075 Monroeville Blvd. has been known as Corporate One Medical Office Park.

RCA lists the seller as Pittsburgh Miracle Mile & Center. The MOBs are adjacent to the 1.4 million square foot Miracle Mile Shopping Center.

The MOB complex, according to HTA, is 98 percent occupied and sits adjacent to the new $248 million, 134-bed UPMC (University of Pittsburgh Medical Center) East hospital, which opened in 2012. UPMC is a major tenant in HTA’s MOB complex.

According to officials with the REIT, current in-place rents are below market value and should enable HTA to increase the rates as leases expire during the next several years.