Dallas-Based Caddis Hires Sector Veteran To Grow The Company’s MOB Portfolio

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W. Todd Jensen has plenty of experience in the healthcare real estate (HRE) sector, and in his 25-year career with both public and private companies has been involved in more than 300 transactions topping $5 billion.

W. Todd Jensen

Dallas-based Caddis, which has been focused on healthcare facilities since its founding as the successor to a previous HRE firm in 2008, is looking to tap into Mr. Jensen’s experience to help grow its medical office building (MOB) portfolio, which currently comprises 42 assets with about 2 million square feet of space and $600 million in value The company recently hired him for a newly created position: executive VP, investments.

“We created this new position because we wanted to add more senior talent to help us grow our portfolio and expand our capital relationships,” says Lance M. Hardenburg, managing partner and CEO of the HRE firm with a national platform. “The company looks to grow the portfolio by making MOB acquisitions through our various medical office investment funds. However, we will continue to consider MOB development opportunities outside our investment funds, and where strategic or other considerations dictate our doing so, we also may pursue acquisitions opportunities on a separately syndicated basis. Mr. Jensen will lead Caddis’ acquisitions team while also providing strategic leadership to business development, capital relationships and development operations.”

As noted, Mr. Jensen’s experience is quite extensive, as prior to joining Caddis he was principal of Jensen Property Group, a real estate development and investment firm focused on healthcare, mixed-use and multifamily properties. Prior to that, Mr. Jensen was with New York-based Healthcare Trust Inc., a non-traded real estate investment trust (REIT), where he helped raise and invest nearly $5 billion in healthcare-related properties. He also spent more than 15 years with several HRE firms, including DASCO Companies, Lauth Property Group and Hammes Company.

Upon learning of Mr. Jensen’s new position, HREI reached out and he agreed to answer questions tossed his way.

HREI: Can you tell us why you decided to join Caddis? What excites you about the company and this opportunity?

W. Todd Jensen: I decided to join Caddis because they are a well-regarded firm with proven capabilities in the acquisition, capitalization, development and management of both medical office buildings and senior housing properties. It’s a great fit with my background and 25-year experience in healthcare real estate, where I have acquired and developed both medical office buildings and senior housing properties on a nationwide basis. I’m excited about the opportunity to help grow the company and the portfolio. That’s what I’ve done a lot in my career — help healthcare real estate businesses grow — and I’ve always thoroughly enjoyed the challenge. There is already a great platform that is poised for growth, and both Caddis and I think I can help.

 

Source: HREI

Medical Properties Trust To Invest $950 Million In Behavioral Health Platform

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Medical Properties Trust, Inc. (the “Company” or “MPT”) recently announced that it has entered into definitive agreements to acquire 18 inpatient behavioral health hospital facilities and an interest in the operations of Springstone, LLC (“Springstone”) from Welsh, Carson, Anderson & Stowe (“WCAS”) for total consideration of $950 million.

Springstone, based in Louisville, Kentucky, is a leading provider of behavioral health services in the United States distinguished by its purpose-built, inpatient facilities in carefully selected markets and care delivery across the full behavioral care acuity spectrum.

The hospitals, along with additional facilities that Springstone expects to develop and acquire, are expected to be master leased pursuant to terms that are anticipated to provide a GAAP-basis yield exceeding 9.0% and lease payment coverage of approximately 1.75x in the near-term. The lease is expected to include an initial 20-year term with CPI-based annual rent escalators subject to a 2% floor.

The Company expects to initially fund the total cash consideration using cash on hand and borrowings under its revolving credit facility and additional financing arrangements, which may include issuances of debt and equity securities, placement of new secured loans on the acquired real estate, or a combination thereof. The sources of financing actually used will depend upon a variety of factors, including market conditions. The transactions are expected to close during the second half of 2021, subject to customary closing conditions, including certain regulatory approvals.

“The Springstone investments give MPT a major presence in the rapidly expanding United States behavioral health care market, which has been underserved in our society despite importance on the same level as acute and post-acute care hospitals,” said Edward K. Aldag, Jr., MPT’s Chairman, President, and CEO. “MPT’s acquisition of the 18 purpose-built inpatient facilities, much like our recent investment in the Priory portfolio in the United Kingdom, appropriately targets the highest level of acuity within the behavioral care continuum, and we believe that our investment in the operating company will result in additional attractive real estate opportunities.”

MPT anticipates that Springstone will continue to be operated by the same senior management team that has created this distinct portfolio of entirely de novo, purpose-built inpatient and outpatient behavioral health facilities in carefully selected markets. It is expected that these highly experienced individuals, led by Executive Chairman Bill Wilcox, CEO Phil Spencer and CFO Greg Miller, will co-invest alongside MPT in the operating company and be responsible for the day-to-day operations of Springstone, which will be essentially unchanged going forward.

“We’re so appreciative of the job the management team did to build this business. We started this company from scratch 10 years ago and are incredibly proud to have built over 50 facilities, created more than 4,000 jobs, and treated tens of thousands of patients with the highest quality care,” said Brian T. Regan, Head of Healthcare and Partner at WCAS. “It was important to us that the management team has the opportunity to be part of Springstone’s ownership and to continue leading the company and its employees to the next phases of growth.”

Philip Spencer, Springstone’s CEO, added, “Over the past decade, Springstone has helped tens of thousands who struggle with mental health and addiction challenges, thanks to the support of Welsh, Carson, Anderson & Stowe and the dedication of our team of compassionate professionals. We look forward to working with MPT to expand our behavioral healthcare model to serve even more communities.”

Benefits of Transaction

Expected to Achieve Immediate Accretion. The strong cash and GAAP returns related to the sale-leaseback transaction and an accretive cash return on MPT’s investments in the operating company, along with MPT’s attractive cost of capital, are expected to result at closing in immediate improvement in per share net income and funds from operations.

Projected to Create an Unmatched Competitive Advantage in Accelerating United States Behavioral Health Care Market. Springstone provides a full continuum of behavioral care including inpatient, partial hospitalization, and intensive outpatient programs and has targeted diversified geographies with positive demographic trends and a commercial-heavy payor mix. These factors, along with its scale and the purpose-built nature of its facilities, differentiate Springstone from competing operators.

The COVID-19 pandemic has accelerated growth in demand for mental health services in the U.S., evidenced by improving Springstone operations throughout 2020. Like in the U.K., the U.S. government and payors alike acknowledge the need for incremental funding for behavioral health care. Multiple Avenues for Growth Including Development and Expansion Projects. Increasing demand for behavioral health services is expected to continue to generate additional attractive development and expansion projects not underwritten in this transaction.

Improved Portfolio Diversification. MPT’s largest individual property investment now represents only 2.6% of pro forma total gross assets. The consummation of the Springstone transaction is subject to customary closing conditions, including applicable regulatory approvals and the finalization of agreements with current management. MPT cannot give assurances that the transactions will be successfully consummated as described above or at all. Barclays and Guggenheim Securities, LLC acted as financial advisors to MPT.

About Medical Properties Trust, Inc.

Medical Properties Trust, Inc. is a self-advised real estate investment trust formed in 2003 to acquire and develop net-leased hospital facilities. From its inception in Birmingham, Alabama, the Company has grown to become one of the world’s largest owners of hospitals with 442 facilities and roughly 45,000 licensed beds in nine countries and across four continents on a pro forma basis. MPT’s financing model facilitates acquisitions and recapitalizations and allows operators of hospitals to unlock the value of their real estate assets to fund facility improvements, technology upgrades and other investments in operations. For more information (including additional details related to the Springstone investment as part of an updated investor presentation), visit the Company’s website at www.medicalpropertiestrust.com.

 

Source: HREI

Health Care-Centric, Mixed-Use Development In Fort Myers, Florida, Gains Traction With Land Deals

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More than three years after Hope Hospice and Community Services Inc. unveiled plans for a 46-acre, health care-centric development in Fort Myers, the mixed-use project has gained significant traction.

And with a trio of recent land deals involving more than one quarter of the total project, only five acres of Hope Preserve remain uncommitted. The three recent parcel sales, which sold for a combined $8.72 million, will result in three new medical office and physicians practices and a traditional office building.

Together, the new projects will contain 148,000 square feet of new commercial space. One of the new buildings, a two-story, 21,000-square-foot office building, will become the corporate headquarters for Stevens Construction Inc.

“Hope Preserve will allow us to be more central to all the areas that we serve,” says Mark Stevens, the company’s president. “And it’ll be a much more visible location for us. We’ve been in the same location for 16 years, and we love it there, but this was just a tremendous opportunity.”

The new 14541 Hope Center Loop quarters, which Stevens will own, will double its office footprint to 10,000 square feet. The balance of the space in the building will be marketed for lease by Fort Myers-based commercial real estate brokerage firm LSI Cos. Inc.

“The company plans to complete the building around the end of this year,” said Stevens.

Designed by Southview Studios, Stevens’ new offices will also contain a training room, indoor and outdoor team lounges, multiple bathrooms and a shower facility, conferences and offices that feature floor-to-ceiling glass.

Meanwhile, a second, medical office building also is slated for the 3.71-acre parcel that Stevens acquired for $2.1 million. There, Stevens intends to develop a 27,000-square-foot building. Completion is scheduled for late Spring of 2022. Radiology Regional has committed to lease the two-story building’s first floor, with LSI marketing the second floor.

Additionally, following its own $4.88 million land deal for 7.06 acres, Orthopedics Specialists of Southwest Florida intends to develop a building between 60,000 square feet and 80,000 square feet in Hope Preserve. Stevens is on tap to construct that building, as well, beginning sometime next year.

The final perimeter parcel of the project, at the intersection of Metro Parkway and Ben C. Pratt/6 Mile Cypress Parkway, was sold in mid-May to Hodges Mantz Properties LLC, an entity formed by a pair of Southwest Florida physicians.

Hodges Mantz paid $1.74 million for a 2.5-acre tract, which is zoned for a medical use, in Hope Preserve. LSI Cos. President Justin Thibaut and agent Christi Pritchett represented Hope Hospice, while VIP Realty Group’s Jack Liptak negotiated for the buyer.

The planned new buildings join The Preserve, a continuing care retirement community with assisted living, skilled nursing and memory care units, at Hope Preserve.

Thibaut notes that with the activity, only 5.1 acres remain available within Hope Preserve. Owner Hope Hospice, which acquired the property in 2010, also is likely to build a hospice house on the site eventually. The end-of-life, nonprofit provider today care for roughly 4,000 people daily.

At least one restaurant and a 124-key hotel also are planned for Hope Preserve. The hotel replaces 92 apartments that were originally envisioned for the development.

All of the activity comes as Gulf Coast Regional Medical Center is completing a $315 million, 275-bed expansion less than a mile away. Thibaut expects the hospital expansion’s draw to only intensify when it opens in the coming months.

“Hope Preserve is in a prime position for users who are looking to be near a major medical center,” Thibaut says. “There’s really been a resurgence of medical office users to areas where retailers traditionally would go.”

Stevens believes his growing firm and the growth at Hope Preserve will dovetail nicely. The company, which operates four offices in Fort Myers, Sarasota, Tampa and Orlando and specializes in health care and hospitality projects, currently has 39 separate projects under construction valued at $94 million, with another $152 million set to begin within the next year.

“The market in Southwest Florida is growing, and with projects that are in many cases are larger in scale and scope than ever before,” Stevens says. “That’s been especially good for us and allowed us to grow right on the targeted pace we’d set a couple of years ago. And with Hope Preserve, we’re just super excited to be on the ground floor of such a dynamic project.”

 

Source: Business Observer