Mercy South Medical Office Building in Bakersfield, Calif., is part of the pending Dignity Health MOB Portfolio sale. (Photo courtesy of CBRE)
Denver-based firm agrees to acquire California and Arizona MOB portfolio for $114 million
A recent U.S. Securities and Exchange Commission (SEC) filing reveals that NexCore Development LLC has agreed to acquire the 13 buildings being offered for sale by Jones Lang LaSalle (JLL) Income Property Trust Inc. as part of the so-called Dignity Health Medical Office Building (MOB) Portfolio. The deal is slated to close during the fourth quarter.
The Sept. 4 Form 8-K filing by JLL says that the deal was struck Aug. 30 and that Denver-based NexCore has agreed to pay $114 million for the baker’s dozen of MOBs in California and Arizona. The Form 8-K indicates that Chicago-based JLL will book a net gain of $14 million on the sale.
The Dignity Health MOB Portfolio was the “Hot Property” featured on Page 8 of the June 2013 edition of Healthcare Real Estate Insights: Hot Property. At that time, we reported that the portfolio totaled 657,811 rentable square feet, including eight buildings in California and five in Arizona. Ten of the buildings are on hospital campuses, while three – all in Arizona – are in high-traffic, off-campus locations.
At that time, San Francisco-based Dignity Health, formerly Catholic Healthcare West and the nation’s fifth largest health system, occupied about 33 percent of the space in the portfolio, according to CBRE Group Inc., which marketed the properties for JLL. Total occupancy was 79 percent, offering plenty of upside, according to CBRE, including the strong possibility of expanded leasing by Dignity Health.
Dignity, the largest not-for-profit hospital provider in California, has an investment grade rating of ‘A’ by Standard & Poor’s and Fitch, as well as an ‘A3’ from Moody’s.
The largest building in the portfolio is the nine-story, 168,511 square foot McAuley Medical Center at 500 W. Thomas Road in Phoenix, which is on the campus of he 673-bed St. Joseph’s Hospital and Medical Center, which is part of Dignity.
Another notable building is the seven-story, 67,810 square foot Northridge I Medical Office Building at 18350 Roscoe Blvd. in Northridge, Calif., which is connected by two skybridges to Dignity’s 371-bed Northridge Hospital Medical Center.
HREI learned of the SEC filing too late to pursue the story for this edition. But we will have complete coverage of the pending transaction in an upcoming edition.
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