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Anchor Health Properties Buys Denver Medical Office Building

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Anchor Health Properties has acquired Renewal Medical Center, a 36,541-square-foot building in Lone Tree, Colo., through its Chestnut Healthcare Fund II, co-managed with Chestnut Funds. Medical Properties of America sold the asset for $13 million, according to Douglas County records.

First Citizens Bank provided $18.7 million in debt financing, with a maturity date set for 2027.

Anchor Health will also provide asset and property management services. Renewal Medical Center was 97 percent occupied at the time of sale. Managing Partner Greg Trainor with Fairfield Asset Advisors represented the seller in the transaction.

The medical office building previously changed hands in 2015, when it traded for $5.2 million, with Baceline Investments as the seller, according to CommercialEdge data.

Rocky Mountain Kidney Care is the main tenant, with the roster also including Insight Surgery Center, Quantum Health Solutions, Broadway Plastic Surgery, T-Mobile and Sprint/Crown Castle. A variety of medical services are available at the property, including nephrology, ophthalmological and cosmetic surgery, plastic surgery and integrative medicine.

Previous owners conducted two rounds of renovations. The 1987-built, Class B asset received a cosmetic upgrade in 2005 and was fully redeveloped in 2012.

Located at 9777 S. Yosemite St., the building is 20 miles from downtown Denver and has access to Interstate 25, with Sky Ridge Medical Center less than 2 miles away. Other medical service providers in the area include UCHealth Lone Tree Medical Center, Lone Tree Medical Plaza, with Centura Parker Adventist Hospital 9.4 miles east.

As of April, 24 medical office buildings—totaling 374,651 square feet—traded in the Denver market over a 12-month period, CommercialEdge data shows. Back in October 2022, another Lone Tree facility changed hands when Healthcare Realty Trust acquired Park Meadows Medical Center from Gulftech International in a $14.8 million transaction.

Denver has a supply pipeline of 10 medical facilities in various stages of development, set to add 611,027 square feet to the existing inventory. The market’s largest medical office underway is a 130,000-square-foot property, developed by Intermountain Healthcare and slated for completion in 2024.

 

Source: Commercial Property Executive

Health-Care Real Estate Deals Hit Record $26 Billion

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Health-care real estate continues to thrive, and investors can’t get enough of the sector, according to JLL’s Valuation Advisory Group’s inaugural Healthcare Investor Survey and Trends Outlook.

Transactions in the sector climbed to $26 billion in 2022, marking an annual record.

In the first report of its kind for JLL, the commercial real estate services firm queried approximately 130 influential leaders in the health-care industry. Participants included private capital providers, which accounted for the highest representation at 33 percent, followed by developers and institutional investment managers, which comprised a respective 23 percent and 19 percent of respondents. The group helped provide a crystal-clear picture of health-care real estate’s success in 2022 and its prospects in 2023.

According to the JLL report, medical office buildings proved a powerful magnet for investors in 2022, with the property type accounting for 58 percent of overall health-care investment activity. Part of the high volume of trading in the sub-sector can be attributed to the $9.4 billion merger between Healthcare Realty Trust and Healthcare Trust of America, which involved a portfolio of approximately 400 MOBs. Had the joining of the two companies not occurred, the numbers would likely look a bit different, as transaction activity declined significantly in the fourth quarter of 2022 due to pricing uncertainty amid rising interest rates and recession fears.

Ambulatory surgical centers followed MOBs in popularity among investors in 2022. Trades involving the property type went on the upswing, jumping 7 percent year-over-year to 27 percent of the total health-care transactions. The investment community’s keen interest in MOBs and ASCs can be linked to an ongoing transformation that has buoyed demand in the outpatient care arena.

“Advances in technology, changes in reimbursement and consumer preference and convenience have shifted sites of care from inpatient to outpatient,” according to the JLL report.

Fundamentally Sound

The rising demand for MOBs along with a low level of new deliveries are serving as a foundation for strong fundamentals in the sector. At the close of 2022, MOBs recorded an occupancy level of 92.3 percent and continued to experience consistent rent growth. MOBs are outperforming the traditional office sector, where the average occupancy level is a notable 11.4 percent lower.

Unlike traditional office buildings, MOBs are not contending with the leasing challenges that accompany the spread of the remote-work trend. And the very nature of MOB space lends itself to longer tenant commitments.

“Because of the high cost to build out a medical office space and proximity to patients, medical office tenants tend to remain in the same space for longer, providing stable occupancy,” as noted in the JLL report.

No Hindrance To Sunny Forecast

Although MOBs are the star of health-care real estate in investors’ eyes, the sector is not impervious to challenges. JLL queried survey respondents regarding their apprehensions about potential obstacles in the health-care investment sector over the next 12 months, and 66 percent pointed to rising interest rates and capital markets as the leading concern. Development costs, garnering the concern of 13 percent of respondents, ranked as the second-most worrisome issue.

Although the investment community is operating with the knowledge that looming obstacles could impact their activity, 66 percent of survey respondents reported that MOBs will remain the most desirable opportunity in health-care real estate in 2023. The immense appeal of MOBs among investors is here to stay for the long term, even amid economic uncertainties.

As noted in the JLL report, “Strong net operating income growth at 2.7 percent in the fourth quarter of 2022, despite high expenses and acceptance of 3 percent escalations, make MOBs a resilient asset class in a cloudy economic climate.”

The future looks bright for health-care real estate investment overall. Thirty percent of survey participants indicated that they anticipate an increase in transaction activity and market valuations over the next 12 months.

 

Source: CPE

Healthcare Realty Trust Buys Denver Metro Medical Office Building For $14.8M

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Healthcare Realty Trust has acquired Park Meadows Medical Center, a 34,685-square-foot medical office building in Lone Tree, Colo.

Gulftech International sold the property in an off-market transaction for $14.8 million.

According to CommercialEdge data, the asset last changed hands in 2008, when the previous owner paid $13.2 million for the building.

William Lucas, Stuart Thomas and Doug Wulf of Cushman & Wakefield represented the seller in the transaction.

The three-story building was completed in 2002 and hosts a surgery center. The property features two passenger elevators, has controlled access and offers 111 parking spots at a ratio of 3.2 spaces per 1,000 square feet. At the time of the transaction, the building was fully leased to a variety of medical users and practitioners.

Park Meadows Medical Center is located at 9218 Kimmer Drive, approximately 19 miles south of downtown Denver and has a strategic position near the Interstate 25 and E-470. Other medical facilities in the surrounding area include Reunion Rehabilitation Hospital Inverness, Mountain Medical and Willow Creek Dental, with Sky Ridge Medical Center 2.4 miles away.

CommercialEdge data shows that Healthcare Realty Trust owns another medical center in Lone Tree, less than one mile from Park Meadows Medical Center, which was acquired in 2021, for $7.7 million.

In July, Healthcare Realty Trust partnered with CBRE Investment Management for the purchase of a medical office portfolio in Mission Viejo, Calif., for which the joint venture paid $134.8 million.

 

Source: Commercial Property Executive