Ardent Health Portfolio Of 16 Fully Occupied MOB Properties For Sale In Texas

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Jones Lang LaSalle Americas, Inc. is offerring for sale The Ardent Health Medical Office Portfolio, a unique opportunity to invest in over 762,000 square feet of medical office buildings leased by partnerships between Ardent Health Services, a leading national private for-profit integrated healthcare provider based in Nashville, Tennessee, and two market-leading academic health systems, The University of Texas Health Science Center at Tyler and The University of Kansas Health System.

The institutionally-managed Portfolio consists of 16 fully occupied properties in Texas and two in Kansas. Upon sale, the Portfolio will be 100 percent leased under new absolute net master leases with substantial 12 years of term and contractual annual rental escalations of two percent, offering durable in-place cash flows and growth in income.

The Portfolio features 13 buildings on hospital campuses representing 91 percent of the rentable area of the Portfolio. The underlying occupancy is nearly 100 percent and the health systems directly occupy 80 percent of the Portfolio net rentable area.

Each of the properties represents strategic on and off-campus locations featuring mission critical infrastructure and a variety of critical medical uses. The Portfolio offers desirable scale to investors in concentrated geographic patient service areas.

The properties are a combination of leasehold interests in campus locations with long-term ground leases and fee simple interests in community locations. The Portfolio will be delivered free and clear of mortgage encumbrances to the purchaser.

Investment Highlights

INSTITUTIONAL-QUALITY MEDICAL OFFICE PORTFOLIO
• 100% leased featuring 80% direct health system tenancy – fully occupied buildings
• 91% of rentable square feet concentrated on campus
• Portfolio comprised of nine single-tenant and nine multi-tenant buildings
• Institutionally managed by a highly regarded and experienced health system owner-operator, Ardent Health Services

SCALE IN MEDICAL OFFICE
• Exceptionally rare opportunity to acquire a large scale, institutional medical office portfolio with a single healthcare system comprised of 762,780 rentable square feet across 18 properties
• Geographic concentrations in Texas and Kansas
• Average building size over 40,000 square feet

ALIGNMENT WITH LEADING HEALTH SYSTEMS
• 100% master leased by affiliates of UT Health East Texas and KU Health-St. Francis
• UT Health Tyler and KU Health – St. Francis enjoy 39% and 26% inpatient market shares, respectively
• 80% direct health system occupancy across the Portfolio
• Strategic outpatient strategies for each health system or third-party provider groups
• Opportunity to partner and strengthen relationships with Ardent Health Services and its premier academic health system partners, The University of Texas Health Science Center at Tyler and KU Health

HIGHLY STABLE INCOME STREAM
• Absolute net lease structures and contractual rent escalations provide predictable and growing income stream with no capital requirements
• High probability of renewal in-place with strategic locations and critical infrastructure
• No tenant termination rights
• Modest in-place rents allow for consistent NOI growth across the Portfolio and a favorable basis for investors

 

Source: HREI

Life Sciences Real Estate Sector Poised To Shatter Records Again In 2021

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Unprecedented demand for life sciences real estate has prices soaring in markets across the country.

Pricing for life science and R&D properties averaged $585 per square foot in the first half of this year, up 50 percent over last year’s average, according to a new report from Newmark.

That increase was partially driven by a handful of major deals. In March, prices peaked at $750 per square foot after Blackstone paid $3.45 billion, or more than $1,800 per square foot, for a lab portfolio located in and around Cambridge, Massachusetts.

Unlike other sectors, life sciences generally did not cater to remote work during the pandemic, strengthening demand for lab space. Additionally, increased research efforts, pandemic-related or otherwise, caused companies to expand at a time when many office tenants were consolidating.

There’s additional interest in life sciences moving forward. After a record $33.1 billion of venture capital funding was invested in the sector last year, funding is poised to blow past that figure this year, having already reached $26.7 billion in the first six months of 2021 alone.

In New York City, which already has more than 2 million square feet of life science space, another 3 million square feet has been proposed. In the San Francisco Bay Area, where there is 31 million square feet, another nearly 18 million square feet has been proposed. And in Los Angeles, where there is 11 million square feet, an additional 453,000 has been proposed.

Still, renovations can be difficult given zoning prerequisites and other fitting issues.

 

Source: The Real Deal

Report: Denver’s Medical Office Building Market Picks Up Momentum

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Metro Denver’s medical office building (MOB) market recorded strong fundamentals in the first half of 2021, according to CBRE’s Denver Medical Office MarketView H1 2021 report.

Saint Joseph Medical Office Pavilion, a 99,000-square-foot medical facility completed by Dallas-based Fidelis Healthcare Partners at 1818 Ogden Street in Denver. (PHOTO CREDIT: CBRE)

Positive new absorption of 150,318 square feet was recorded in H1 2021 with On-Campus space contributing to most of the absorption activity. Direct vacancy sat at 10.7% in H1 2021, a modest 28 basis points (bps) increase year-over-year, while overall availability was unchanged at 12.3%.

The average direct asking rate rose to $30.68 per square foot full-service gross (FSG), a 5.4% increase since H1 2020. A total of 174,000 square feet of newly constructed MOB space was delivered to the market in H1 2021 with 70.1% of the space already leased. The Denver MOB investment activity picked up momentum this year totaling $104.9 million in H1 2021, up 101.8% year-over-year.

Outlook

With absorptions rebounding sharply to pre-pandemic levels in the first half of 2021, the Denver medical office market will continue to flourish as owners realign their space needs and discuss future projects.

Though economics is still driving transactions, there has been a flight to quality among tenants that is expected to continue over the next several quarters. The increased demand for healthcare properties is driving strong investor interest as seen by the increased sales activity in H1 2021 which is forecast to be even stronger throughout the balance of 2021 and beyond.

While there has been some impact to the medical office market from the COVID-19 pandemic, the activity during the first half of 2021 showed resiliency and a necessity for healthcare space.

 

Source: Mile High CRE