Non-Traded REIT Adds Eight Skilled Nursing Facilities, Five Assisted Living Facilities and Seven Medical Office Buildings to Portfolio
Griffin-American Healthcare REIT II has acquired a large portfolio of senior care and medical office facilities for an aggregate $103 million, just a week after Health Care REIT's blockbuster agreement to acquire Sunrise Senior Living Inc.
in an all-cash deal for nearly $1 billion.
The non-traded Griffin-American Healthcare REIT II acquired the 13-building senior care portfolio in Washington and Oregon along with seven medical office buildings (MOBs) in Illinois, Texas, Tennessee and Georgia.
The 13 buildings known as the Pacific Northwest Senior Care Portfolio were acquired from entities affiliated with Regency Pacific, according to a statement by American Healthcare Investors and Griffin Capital Corp., co-sponsors of Griffin-American Healthcare REIT II. The portfolio, master-leased through 2025 by Regency Pacific Management, consists of eight skilled nursing facilities and five assisted living facilities totaling about 369,000 square feet and 838 licensed beds throughout Washington and Oregon.
Regency Pacific was represented by Don Ambrose and Chris Urban of Ambrose Capital Group, Inc. Griffin-American Healthcare REIT II financed the acquisition using $45 million in borrowings under its unsecured line of credit with Bank of America, N.A., and the remaining using cash on hand.
The non-traded REIT’s portfolio currently totals 110 buildings valued at about $925 million based on purchase price spread across 26 states.
"We seek to acquire properties that provide multiple levels of diversification to Griffin-American Healthcare REIT II," said Danny Prosky, a principal of American Healthcare Investors and president and chief operating officer of the REIT. "These latest acquisitions are a good example of this -- they add geographic, asset and payor mix diversification to an already substantial nationwide portfolio of healthcare-related properties."
The seven MOBs total about 199,000 square feet and are located in Naperville and Urbana, IL; Temple, Killeen and Rowlett, TX; Shelbyville, TN; and Jasper, GA.
They include the following:
- Urbana Medical Office Building is a three-story building constructed in 2003 consisting of approximately 47,000 square feet. The medical office building is located on the campus of, and physically connected to, Provena Covenant Medical Center in Urbana, Illinois and is fully leased to three tenants, the largest of which is the medical center.
- Naperville Medical Office Building is a two-story building constructed in 2004 consisting of 35,000 square feet. The medical office building is connected to Naperville Surgical Hospital via a covered walkway and is currently 97% leased to six tenants. The Urbana and Naperville properties were acquired from HSA Primecare, an unaffiliated third party represented by Savills LLC.
- Killeen Medical Office Building is a single-story building constructed in 1988 with a renovation and expansion completed in 2007. The 9,000-square-foot medical office building isfully leased to Physicians of King’s Daughter through November 2024.
- Temple Medical Office Building in Temple, TX, is a single-story building constructed in 1974 with a comprehensive renovation in 2004. The 41,000-square-foot medical office building is located on the campus of, and sits adjacent to, Children’s Hospital at Scott & White and is directly accessible via a covered walkway. The property is fully leased to Physicians of King’s Daughter through April 2024.
- Rowlett Medical Office Building in Towlett, TX, is a single-story building constructed in 2005 consisting of 16,000 square feet in the Dallas suburb of Rowlett. The medical office building is 100% leased to three tenants, including Texas Health Resources. The Killeen, Rowlett and Temple properties were acquired from Caddis Partners, an unaffiliated third party represented by Cain Brothers.
- Heritage Medical Office Plaza is a two-story, multi-tenant medical office building located on the campus of Heritage Medical Center in Shelbyville, TN. Built in 2008, the 31,000-square-foot building is currently 100% leased to two tenants, including Community Health Systems, which owns and operates the 104-bed medical center. Heritage Medical Office Plaza was acquired from an unaffiliated third party represented by Clinical Property Advisors.
- Mountainside Medical Building III is a one-story medical office building constructed in 2011 adjacent to the 42-bed Piedmont Mountainside Hospital. The 20,000-square-foot facility is currently 100% leased to three tenants, the largest of which is the adjacent hospital. Mountainside Medical Building III was acquired from Mountainside Medical Developers LLC, an unaffiliated third party represented by Chris Bodnar and Lee Asher of CBRE, Inc.
The medical office building acquisitions were financed through the assumption of approximately $14 million of existing debt, $21.5 million in borrowings under Griffin-American Healthcare REIT II’s unsecured line of credit with Bank of America, N.A., and the remaining using cash on hand.
As of June 30, 2012, the Griffin-American Healthcare REIT II property portfolio was 96.1% leased with a weighted average remaining lease term of approximately nine years and leverage (total debt divided by total assets) of 31.2%.