CHARLOTTE AND WINSTON-SALEM, N.C. — CGRE Holdings has purchased a portfolio of 22 medical office buildings from Winston-Salem-based Novant Health for $122 million in a sale-leaseback transaction. Under the agreement, Novant Health will continue to occupy the buildings under a 15-year lease at market rents. The properties are located in Winston-Salem and Charlotte. Novant’s largest holdings in the area include the 961-bed Forsyth Medical Center in Winston-Salem and the 531-bed Presbyterian Hospital in Charlotte.
The company approached Colliers Turley Martin Tucker in May 2008 for advice in the best way to structure its holdings. “They were looking to raise cash for future growth of their operations,” says Thomas Powers of Colliers Turley’s Cincinnati office. Powers, along with John Huguenard of the firm’s Indianapolis office, represented Novant in the sale. “There was a determination that their resources were better used in other means than owning real estate that was illiquid.” CGRE was not represented in the transaction.
The deal took more than a year to complete because of the current state of the real estate market. According to Thomas, the buyer had to get creative and had to obtain financing through non-traditional means. The biggest roadblock to the deal, however, was the poor condition of the markets.
“There just has been very little activity from an investment standpoint around the country and the world so far this year due to the economy and the lack of debt,” Thomas says. “We had a good credit tenant, so that helped considerably.”
In the end, the deal got off the ground and has been a bright spot in a dark and stagnant market.
“From my understanding,” he says, “it’s one of the larger medical office transactions that’s happened in the world so far this year.”
— Jon Ross