Orlando Health To Buy Land Near Lakeland For Medical Campus, Hotel, And More

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Orlando Health has a contract to buy about 80 acres on the south side of Lakeland for a potential future medical campus that eventually will include up to a 360-bed hospital.

It also will feature medical office space, a small hotel and limited supporting retail, which will be built out in phases as part of a long-term plan.

Executives with the nonprofit health care organization and network of community-based hospitals said plans for the property, the first phase of which is not expected to be built for several years, are still under development, and Orlando Health will research and seek community input to ensure the eventual Orlando Health Lakeland Health & Wellness campus meets the needs of Lakeland and nearby communities in Polk County.

“Serving Polk County has been a part of our long-term growth plan for years,” said Matt Taylor, vice president of asset strategy with Orlando Health, in a prepared statement.

Sanlan RV & Golf Resort Inc. owner Edward Holloway is the seller of the vacant property that’s in an unincorporated part of the county, just south of the Polk Parkway on the east side of Lakeland Highlands Road. Orlando Health has applied for annexation of the land by the city and for changes to the comprehensive land-use plan and zoning. While Orlando Health executives do not expect traffic associated with the project to significantly impact the area, a new traffic study will be part of the process.

“Our planning is in the very early stages,” said Taylor. “We intend to take our time and be very thoughtful. We will become involved in the community at different levels, including community meetings, civic groups and a public website. When we are ready to move forward, we want to ensure we are meeting the needs of the community.”

 Orlando Health, AdventHealth and Nashville, Tennessee-based HCA Healthcare Inc. (NYSE: HCA) all have projects that are part of $525.1 million in facilities that will be completed this year.

Expansion projects like the new hospitals — which create temporary construction positions and full-time medical jobs — allow health care facilities to expand into new territories where they don’t already offer services. Meanwhile, area hospitals also are wrapping up construction work on new medical office buildings, freestanding emergency rooms and expansions to their current facilities that add beds or other services.

Orlando Health is a $3.8 billion health care organization with hospitals, physician practices and outpatient care centers across Central Florida. The organization is home to the area’s only Level One Trauma Centers for adults and pediatrics, and it is a teaching hospital system. More than 3,100 physicians have privileges across the system, which is also one of the area’s largest employers with more than 20,200 employees who serve more than 167,000 inpatients, more than 2.7 million outpatients, and more than 20,000 international patients each year.

Central Florida expansion is the name of the game for hospital companies in 2020. Click here for the Orlando Business Journal slideshow ‘14 Central Florida Medical Projects Set To Open In 2020‘.

 

Source: Orlando Business Journal

The Dallas-Fort Worth Market: When Physician Real Estate Owners Should Buy And Sell

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Dallas-Fort Worth is a unique market for physician real estate owners.

The city’s growing population affords the benefits of a primary market, allowing a practice to operate in a large medical office building in a densely populated area alongside a major freeway all while creating synergies with neighboring providers.

However, given Dallas-Fort Worth is less dense than other major metropolitan areas like San Francisco, Los Angeles, and New York, providers here have a unique opportunity.  Physician groups can actually build their own facility at a reasonable price, allowing them to offer comprehensive services under one roof, providing a more convenient and cost-effective experience for patients.

Many physicians develop their own facility because it allows them to control their destiny, manage their occupancy cost, and become a real estate investor.  Frequently, physicians focus solely on the benefits of flexibility, pride of ownership, and long-term monthly cash flow and haven’t yet determined their long-term strategy for one of their largest investments.

Over the next decade we’ll see many physicians looking towards retirement. With 43% of physicians over the age of 55, near term turnover is imminent. That number is even higher for specialist providers such as Orthopods (52%), Urologists (48%), and Ophthalmologists (48%). Considering 75% of physician-owned practices have just 1-20 providers, physician turnover can have a major impact on a practice. But what does that mean for the real estate?

For many homeowners, if you want to move, you vacate your home and likely sell it for an appreciated value. For many small business owners, you lease from a landlord and operate under a short-term lease. For many commercial business owners, even if you retire, you still maintain equity in the business, which also owns the real estate.

Physician-owned clinical real estate is different. Most commonly, the practice and real estate entities are composed of different partners. If a health system buys your practice, they have little interest in buying your real estate. If a young physician joins your practice, they may not have the financial capability or desire to buy into the real estate, especially with medical school debt at an all-time high. Unlike other businesses where retired owners maintain some equity, if a physician retires, his ownership is liquidated and redistributed to existing or incoming partners.

Let’s say you retired and still own the real estate; you’re no longer in control of your tenant. The practice may continue to operate there, but likely under a short-term lease to maintain flexibility.  If the practice vacates your building, you’re stuck trying to sell a large special-purpose facility.  Most office users don’t need a 20,000 SF facility with a large waiting area and layout suited to delivering healthcare services.

In Dallas-Fort Worth, the current average sale price for vacant medical office buildings between 10,000 and 50,000 square feet is $93 per square foot, and that’s after being on the market ten and a half months. To put this in perspective, the cost to construct a new medical office building can range between $150-$250 per square foot, and the average value of medical office properties structured as investment sales is $299 per square foot.

Based on the numbers, it’s apparent that the best time to sell your real estate is while you remain operating in it, thus positioning it as an investment sale. For owner-occupiers like physician practices, this transaction is known as a sale-leaseback. A sale-leaseback is simply a real estate sale simultaneous with executing a new long-term lease. In this type of transaction, the real estate is often sold to a 3rd party institutional investor seeking a stream of consistent rental cashflow.  Instead of paying rent to yourself, the practice now pays rent to a third-party landlord.

“Even if a real estate sale doesn’t meet your current objectives, addressing potential partnership challenges early will maximize the value and security of your investment.” points out Collin Hart, CEO & Managing Director of ERE Healthcare Real Estate Advisors.

At first, a sale-leaseback may sound similar to a reverse mortgage or a loan. While it’s not quite that, it’s certainly an alternative finance structure.  These sales are commonly used by larger corporations as a way to free up capital for investment in other areas, without carrying debt on their balance sheet. However, for many physician-owned practices, this model can be used strategically. A sale and leaseback gives physicians the ability to cash out of their real estate at a peak in the market.

At the same time, this type of sale solves challenges related to partnership structuring, recruitment, turnover, and succession planning.  With demand for healthcare real estate investments on the rise, these transactions can be structured with limited personal liability, providing flexibility for retirement during the term of the lease, without financial exposure.

Over the last few decades, owning a medical facility has given physicians flexibility; however, divesting of real estate can create opportunities for the future.

 

Source: D CEO Healthcare Magazine

Boynton Beach Mall Redevelopment Plan Chops Retail, Adds Housing And Offices, Including 65,000 Square Feet Of Medical

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A plan to redevelop Boynton Beach Mall by owner Washington Prime Group was revealed this week and it halves retail space at the 34-year-old mall, adding multi-family housing, a hotel, and offices.

The master plan and rezoning request for the 116-acre site was filed with the Boynton Beach City Commission, which gave initial approval, but meets again on the plans Jan. 21.

The redeveloped mall would include a 400-room hotel, 65,000 square feet each of medical office space, and general office space, and 35,000 of new restaurant space, according to the plan filed. The redevelopment would happen over five phases, with the first phase removing the former Sears buildings and adding a 400-unit apartment building accodring to Washington Prime.

The Boynton Beach Mall once had tenants including Burdines, JCPenney, Jordan Marsh and Lord & Taylor. But, like other malls facing less in-store shopping and an increase in online shopping by consumers, retail tenants have dwindled over the years, with new types of tenants coming in.

“According to city documents, 30 percent of the mall is now vacant, and its proposed redevelopment would not only stabilize it, but make it a desirable destination once again,” said Bonnie Miskel, a lawyer representing primary mall owner Washington Prime.

In its proposal for redevelopment, Washington Prime stated that the current use of the property as an aging mall is in steady decline as it no longer meets the needs of the community and is slowly becoming a source of blight in the city. Occupancy at the mall has dropped by 11.5 percent between 2015 and 2016, according to documents submitted to the city to justify rezoning.

The proposal would reduce the existing mall square footage for retail from 1,034,745 about 1 million square feet to 482,750 square feet, and build separate, mixed-use buildings with retail use on the 1st floor and residential units above. Developers also would add up to 1,420 residential apartments on the site, along the north end and southwest side of the mall property, and inside the new mixed-use buildings.

But some Boynton Beach residents expressed concerns on the NextDoor app about mounting traffic off Congress Avenue near the mall and that mall redevelopment plans didn’t seem to include any new entertainment venues for the community, such as a park, bowling alley or sports center.

“The redevelopment would include public spaces for events and retail space that could include experiential-type tenants,” Miskel told commissioners.

The plan doesn’t have an impact on Macy’s and JCPenney, the two major department stores remaining at the mall, which are owned separately, and Christ Fellowship Church, owner of a former Dillard’s department store space in the mall.

Boynton Beach Mall is not the only mall in South Florida looking to add residential housing. Apartments are planned at Coral Square Mall in Coral Springs and at the former Fashion Mall in Plantation.

 

Source: SunSentinel