MILWAUKEE — Physicians Realty Trust (NYSE: DOC), a self-managed healthcare REIT based in Milwaukee, has entered into four separate purchase agreements in Georgia, Alabama, Washington, New York and Illinois totaling $123.2 million.
In the Southeast, the REIT has partially closed on the purchase of a 309,865-square-foot portfolio of 13 medical office buildings for $34.5 million. Known as the Columbus Regional Medical Office Portfolio, 12 of the properties are located in Columbus, Ga., and one is located in Phenix City, Ala.
The portfolio is 88 percent occupied, and 11 of the 13 properties are located adjacent to the 413-bed Columbus Regional Medical Center (CRMC) and the 219-bed Doctors Hospital, two of Columbus Regional Healthcare System’s (CRHS) short-term acute care hospitals.
The portfolio features a mix of healthcare providers anchored by physician practice groups that are affiliated with CRHS and the Columbus Clinic.
As part of the transaction, the CRHS-related leases totaling 45 percent of the overall portfolio’s base rental revenue have been renegotiated and extended to 10-year lease terms. Physicians Realty Trust has closed on 12 of the 13 buildings, with the final building expected to close by the end of 2014.
“We are pleased to have the opportunity to work with Columbus Regional to complete a healthcare system medical office building ‘monetization’ and assume responsibility for owning and managing Columbus Regional’s medical office facilities,” says John Thomas, president and CEO of Physicians Realty Trust. “Columbus is Georgia’s second-largest city, is home to Fort Benning and AFLAC Insurance and was just included in Livability.com’s 2014 Top 100 Best Places to Live.”
Physicians Realty Trust has also entered into three separate additional purchase agreements with an aggregate value of $88.7 million.
The first agreement is for the purchase of the 160,000-square-foot Trios Health Medical Office Building, which is under construction by developer C.D. Smith in Kennewick, Wash. The building is 100 percent pre-leased and is expected to open in late June 2015.
As part of the Trios Health Southridge Campus, the medical office building will be connected to the Trios Southridge Hospital and commissioned primarily for outpatient services and medical staff offices. It is expected that most of the physician offices will be occupied by the Trios Medical Group.
At closing, Physicians Realty Trust would assume a 60-year ground lease and enter into a 30-year absolute triple-net master lease with Trios Health Hospital that escalates annually at 2.35 percent. The REIT has agreed to acquire the medical office building for $64 million in cash. Physicians Realty is not financing or otherwise participating in the development of the building.
“We are so pleased to have the opportunity to purchase this very large, fully leased, state-of-the-art medical office and outpatient care facility in Kennewick, once C.D. Smith completes the construction in 2015, and the Trios Southridge Hospital occupies the facility with their physicians and services,” says Tommy Thompson, chairman of the board of Physicians Realty Trust, and former governor of Wisconsin.
The REIT also entered into a purchase and leaseback agreement for two medical office buildings located in Middletown, N.Y. The buildings total 35,456 square feet and are fully occupied by Middletown Medical PC, a 56-member multi-specialty physician group. At closing, Middletown Medical would enter into a 12-year absolute triple-net master lease for the two buildings that escalates annually at 2.5 percent. The purchase price for the medical office buildings is approximately $14.4 million in cash.
Lastly, Physicians Realty Trust entered into a purchase agreement for the Carle Danville Clinic located in Danville, Ill. The Carle Danville Clinic offers pediatrics, OB/GYN, family and adult medicine, as well as specialty services such as anticoagulation management, allergy and plastic surgery. The facility is a 46,663-square-foot medical office building that is 100 percent occupied by The Carle Foundation. The purchase price for the clinic is approximately $10.3 million in cash.
Physicians Realty Trust acquires, selectively develops, owns and manages healthcare properties that are leased to physicians, hospitals and healthcare delivery systems.
The company’s stock price closed on Friday, Nov. 21 at $15.41 per share, up from $12.02 per share at this time last year.
— John Nelson