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For Sale: Core, San Diego On-Campus 150,000 SF Medical Office Acquisition/Development Opportunity

Palomar Health, Outpatient Centers I & II, San Diego, CA

On Campus, State of the Art
New Construction Medical Office Portfolio


Investment Overview

HFF, as exclusive advisor, is pleased to present to qualified investors the opportunity to acquire the long-term leasehold interest in Palomar Health Outpatient Centers I & II (“PHOC”), two build-to-suit Class A medical office buildings for Palomar Health (S&P: BBB-) totalling approximately 150,000 square feet in North County San Diego.  Palomar Health has made pre-leasing commitments of 70% for Phase I and 50% for Phase II that are triple net structures, with 2.75% annual rent increases and 15-year terms.  Preliminary plans for the services offered in Phase I include high-acuity departments such as radiation, oncology, express care/outpatient clinical services, and a Palomar-Rady Children’s Hospital venture.  PHOC is strategically located adjacent to the award-winning Palomar Medical Center Escondido (“PMCE”), a 288-bed hospital and the only Trauma Center within a 20-mile radius, serving California’s largest public healthcare district at 2,200 square miles.  With Palomar Health’s announced closure of their aging downtown hospital virtually all services will be relocated to PHOC.  The project also sits at the crossroads of the I-15 (248,000 AADT) and SR-78 (89,500 AADT) freeways, two major thoroughfares in San Diego County, making the site highly accessible to North San Diego County, the second-most-populous region in the county after the North Central Region.  Both phases will be three stories and approximately 75,000 square feet each.  The first phase shell building is now completed; Palomar Health’s rent has commenced with completion of its tenant improvements (presently underway) projected in Q1-2019.  The second phase is scheduled to break ground in Q3-2018 with delivery scheduled for Q3-2019.

Key Investment Highlights

  •  Core San Diego Area Medical Office Development Leased To Palomar Health System
  • Mission-Critical On Campus Location At Palomar Medical Center Escondido
  • Long-Term Nnn Lease With Fixed Annual Increases
  • Quality New Class A Construction
  • Relocation Of Desirable High Acuity Services
  • Thriving Medical Office Area Fundamentals
  • Strong Local Economic & Demographic Drivers

Palomar Health Outpatient Centers comprises a state-of-the-art medical office complex located on the 56-acre Palomar Medical Center Escondido campus and anchored by the prestigious Palomar Health system.

Palomar Health is both a state health care district and a regional leader in healthcare, servicing the inland communities of San Diego’s North County for almost 70 years.  Palomar Health features two hospitals (Palomar Medical Center Escondido & Palomar Medical Center Poway) with a combined 537 beds, along with four other campuses that offer services including skilled nursing (129 beds), surgery, oncology, and outpatient care.  It is the most comprehensive health care system in Northern San Diego County and among the top 20% of “small health systems” nationwide (Modern Healthcare).  In 2013, Palomar Health became the first health system in California to join the prestigious Mayo Clinic Care Network, with the mission of fostering physician collaboration to improve the delivery of health care to patients and communities.

Capital Markets Advisory Team
Medical Office Investment Advisory

Evan Kovac
Managing Director
CA Lic. #01750736
Andrew Milne
CA Lic. #01868031
Trent Jemmett
Senior Associate
CA Lic. #01982473

Debt & Structured Finance

Tim Wright
Senior Managing Director
CA Lic. #00947194

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