Healthcare Realty Trust Announces The Formation Of Joint Venture With TIAA

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Healthcare Realty Trust Incorporated (NYSE:HR) announced that it has entered into a joint venture agreement with Teachers Insurance and Annuity Association (“TIAA”) to invest in a broad range of medical office buildings.

The joint venture strengthens the Company’s efforts to sustain higher investment volume and earnings growth regardless of market volatility by further diversifying its funding sources. The Company is the managing member of the partnership and manages day-to-day operations and leasing of the properties in the joint venture.

Healthcare Realty owns a 50% interest in the joint venture and will fund its pro-rata share of future investments. The joint venture expects to purchase approximately $200 million of properties annually and does not contemplate using property level debt in most instances.

On November 12th, the joint venture purchased its first property for $16.6 million at a 5.1% cap rate. The 92,139 square foot building is located on Allina Healthcare’s Mercy campus in Minneapolis. The joint venture will seek to realize additional value through the lease up of the 80% occupied building. Property level debt was not associated with this initial acquisition. The Company intends to provide additional disclosure in its future quarterly supplemental materials regarding properties owned by the joint venture. BlackBirch Capital served as advisor to Healthcare Realty on this transaction.

Healthcare Realty Trust is a real estate investment trust that integrates owning, managing, financing and developing income-producing real estate properties associated primarily with the delivery of outpatient healthcare services throughout the United States. As of September 30, 2020, the Company owned 211 real estate properties in 24 states totaling 15.5 million square feet and was valued at approximately $5.5 billion. The Company provided leasing and property management services to 11.9 million square feet nationwide.

In addition to the historical information contained within, the matters discussed in this press release may contain forward-looking statements that involve risks and uncertainties. These risks are discussed in filings with the Securities and Exchange Commission by Healthcare Realty Trust, including its Annual Report on Form 10-K for the year ended December 31, 2019 under the heading “Risk Factors,” and in its Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020, June 30, 2020, and September 30, 2020 and other risks described from time to time thereafter in the Company’s SEC filings. Forward-looking statements represent the Company’s judgment as of the date of this release. The Company disclaims any obligation to update forward-looking statements.

 

Source: GlobeNewswire

Wall Street Analysts Laud Medical Office Building Sector During BOMA MOB Conference

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With medical office buildings (MOBs) continuing to show their resiliency amid the COVID-19 pandemic, it would only make sense that the product type continues trading at strong pricing and attracting an even wider range of investor types.

MOB sales volume in the first half of 2020, was $5.5 billion, “which was 10 percent higher than in the same period in 2019,” according to Mindy Berman of JLL. “This is really a ratification of medical office, and our sentiment at this point is (the volume) we will equal or exceed the 2019 level.” (PHOTO CREDIT: HREI)

Perhaps left out of the MOB buyer’s market of late have been the country’s healthcare-focused, real estate investment trusts (REITs). While their stock prices have rebounded in recent months from large drops at the outset of the pandemic, the REITs haven’t been as big of a buyer group as they normally are.

“But you know that puts the REITs undervalued right now, in our in our opinion, relative to their net asset value,” said Todd Stender, a senior equity analyst with Wells Fargo Securities. “That also is going to contribute to them maybe not growing externally as fast, if they don’t have access to the equity market. HTA (Healthcare Trust of America, NYSE: HTA), for example, does have some forward equity that they can tap, and they prudently tapped that market recently and I believe they have until June of next year to tap that equity.”

 

Source: HREI

 

40,000-SF Physician-Owned Medical Office Building Sells In Dallas-Fort Worth

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HREA | Healthcare Real Estate Advisors is pleased to announce the successful sale of a 40,000 SF Class “A” Physician-Owned Medical Office Building located in the greater Dallas/Fort Worth MSA.

The Class “A” medical office building was recently developed to consolidate multiple physician practice groups and ancillary services into one location. With 14 practice groups, the property provides patients with convenient access to a variety of specialties and services, including ENT, orthopedics, gastroenterology, pain medicine, family practice, and physical therapy.

HREA structured the transaction as a Hybrid Sale-Leaseback, which allowed the existing physician-owners to continue to own 24% of the building in a tax-deferred manner and achieve a valuation multiple of over 16 times. As a result, the physician-owners were able to get both liquidity in the form of distributions, as well as physician-ownership alignment between the practice (Opco) and the real estate (Propco).

 

Source: HREI