IRVINE, CALIF. — Griffin-American Healthcare REIT III Inc. has completed the acquisition of 19 healthcare properties for approximately $340 million. The acquisitions were comprised of 17 medical office buildings, an acute care hospital and a seniors housing facility.
“These latest acquisitions represent high-quality assets leased by very strong tenants and operators with whom we look forward to sharing mutually rewarding business partnerships,” says Danny Prosky, president, chief operating officer and one of the largest stockholders of Griffin-American Healthcare REIT III. “They also add tremendous diversification to our rapidly growing portfolio.”
Griffin-American Healthcare REIT III’s most recent acquisitions include:
• Southlake Hospital in Southlake, Texas: Built in 2013, Southlake Hospital is a 70-bed acute care hospital spanning 142,000 square feet and 10.6 acres. The site includes a three-story, 400-space parking garage. The hospital is leased through April 2033 to Forest Park Medical Center, a physician-owned hospital system that currently operates four medical facilities comprising a total of 280 beds in the Texas cities of Dallas, Frisco, San Antonio and Southlake, with campuses in Fort Worth and Austin currently under development. Forest Park will operate Southlake Hospital under an absolute net lease with annual rent escalations tied to the U.S. Consumer Price Index with an annual cap of 3 percent. Southlake Hospital was acquired from South Texas Medical Development LP, an unaffiliated third party represented by Marty Cohan of Marcus & Millichap.
• Mount Olympia Medical Office Building Portfolio in Mount Dora, Fla.; Olympia Fields, Ill.; and Columbus, Ohio: The three-building Mount Olympia Medical Office Building Portfolio totals approximately 53,000 square feet and is currently 97 percent leased to multiple tenants, including Mount Carmel Health, Surgery Center of Mount Dora and an affiliate of Fresenius Medical Care. The portfolio is affiliated with several major healthcare providers, including CHE Trinity Health, Central Florida Health Alliance and Fresenius Medical Care. The weighted average remaining lease term within the portfolio is approximately nine years. Mount Olympia Medical Office Building Portfolio was acquired from IRA Mt. Carmel LLC, IRA Mt. Dora LLC and IRA Holdings II LLC, unaffiliated third parties represented by Lee Asher and Chris Bodnar of CBRE.
• East Texas Medical Office Building Portfolio in Longview and Marshall, Texas: East Texas Medical Office Building Portfolio is a nine-building, 393,000-square-foot portfolio consisting of multi- and single-tenant medical office buildings located primarily on or adjacent to the campuses of the Good Shepherd Medical Centers in Longview and Marshall. Each of the medical office buildings is associated with the 596-bed Good Shepherd Health System, the region’s primary provider of medical services. The portfolio is currently 98 percent leased to 43 tenants, including the health system, which leases more than 42 percent of the portfolio. The weighted average remaining lease term within the portfolio is approximately 8.7 years. East Texas Medical Office Building Portfolio was acquired from Good Shepherd Health System, an unaffiliated third party represented by Sean Tu of Cain Brothers.
• Premier Medical Office Building in Novi, Mich.: Built in 2008, the 45,000-square-foot Premier Medical Office Building is currently 92 percent leased to 14 tenants. Located within two miles of the 200-bed St. John Providence Park Hospital, more than half of the building is leased to tenants affiliated with major regional healthcare providers, including: Detroit Medical Center, St. John Providence Health System, Wayne State University School of Medicine and Henry Ford Health System. Approximately 61 percent of the building is leased through November 2021, while the weighted average remaining lease term is approximately 5.7 years. Premier Medical Office Building was acquired from Affiliated Investors LLC, an unaffiliated third party represented by Barry Swatsenbarg and Rich Deptula of Friedman Integrated Real Estate Solutions.
• Springdale Assisted Living Facility in Springdale, Ark.: Springdale Assisted Living Facility is a one-story, approximately 53,000-square-foot seniors housing facility comprised of 76 units in Springdale in northwestern Arkansas. The acquisition of Springdale completes the purchase of the three-building Delta Valley Assisted Living Portfolio. In September 2014, Griffin-American Healthcare REIT III closed on the acquisition of the other two components, located in Batesville and Cleveland, Miss. The portfolio is 100 percent master-leased to Providence Management LLC under a 15-year absolute net lease with two 10-year renewal options. Providence operates a portfolio of six purpose-built assisted living facilities located primarily in Mississippi. Springdale Assisted Living Facility was acquired from Providence Management LLC, an unaffiliated third party represented by Dan Revie of Ziegler and Cos. Inc.
• Independence Medical Office Building Portfolio in Verona and Morristown, N.J.; Somerville, Mass.; and Southgate, Ky.: The four-building, approximately 378,000-square-foot Independence Medical Office Building Portfolio is currently 96 percent leased to more than 70 tenants in the New York City suburbs of Verona and Morristown; the Boston suburb of Somerville; and Southgate, located three miles south of Cincinnati across the Ohio River. Major healthcare providers associated with the portfolio include: Harvard Vanguard Medical Associates, Hackensack University Medical Center Mountainside Hospital, Atlantic Health System and St. Elizabeth Healthcare. The Independence Medical Office Building Portfolio was acquired from Kadima Medical Properties LLC, an unaffiliated third party represented by Steve Hall of HealthAmerica Realty Group.
“We couldn’t be more pleased with the rate at which we’re achieving size and scale in an institutional-grade portfolio while continuing to demonstrate the discipline that our stockholders have grown to expect from us,” says Jeff Hanson, chairman, CEO and one of the largest stockholders of the REIT. “We began acquiring properties in June 2014 and are on the cusp of owning a portfolio valued at nearly $1 billion (based on aggregate acquisition price, including pending acquisitions).”
Griffin-American Healthcare REIT III completed the acquisitions using cash on hand, as well as the assumption of a loan totaling approximately $8 million tied to Premier Medical Office Building.
The REIT is co-sponsored by American Healthcare Investors LLC, a healthcare real estate investment and management firm based in Irvine, and Griffin Capital Corp., a private real estate investment firm based in Los Angeles. Including these acquisitions, the Griffin-American Healthcare REIT III portfolio is comprised of 29 buildings diversified across 14 states, representing an aggregate purchase price of approximately $393 million.
Additionally, the REIT has announced that it has executed letters of intent and/or purchase and sale agreements to acquire 31 additional healthcare properties for an aggregate purchase price of approximately $530 million. These pending acquisitions are subject to customary closing conditions and the satisfaction of other requirements as detailed in the agreements.
— John Nelson