Surgical Development Partners of Franklin, TN and about 50 localdoctors received approval six days ago from the US Bankruptcy Courtin El Paso to acquire the facility at 1416 George Dieter Dr. on thecity's east side. The sale includes a neighboring 40,000-sf medicaloffice building and 6.4 acres of adjacent land.

|

The purchase, financed by Health Care REIT of Toledo, OH,encompasses shares held by a partnership of 25 doctors who were theprevious owners and original investors in the four-year-oldhospital. The 25 doctors have all joined the new partnership.

|

According to Surgical Development president and CEO G. EdwardAlexander, he learned of the potential buy from Health Care REITbefore the property went into bankruptcy. When the previous ownersdecided to file for Chapter 11, they asked Alexander's company tomake a bid they could use in court as a basis for valuation. "Thecourt awarded us stalking-horse status," Alexander says. "The offerwe made became the floor for any subsequent sale." UltimatelySurgical Development faced only one other bidder for the asset,Rockwall Hospitals Inc. of Richardson, TX. The winner was selectedon the basis of price.

|

Alexander says he has been looking for opportunities in the ElPaso market for four years. His company, which owns five otherhospitals and five outpatient surgical centers in six states,including Texas, typically does ground-up development, but is opento attractive investment options in strong markets. He considersPhysicians Hospital to be a highly promising asset that primarilyneeded a new infusion of working capital to fulfill itspotential.

|

"The market is dominated by ACA and Tenet," he explains. "Thisis one of the few competitors to those big systems. In general, ElPaso is a good market for healthcare. The military base isexpanding very rapidly and service jobs tend to follow themilitary. Since the base is on the east side, growth has all goneeast. We're right in the middle of the growth."

|

Alexander tells GlobeSt.com he pulled the investment grouptogether by preparing a private placement memorandum and doing asyndication. He says he is seeking additional investors and willcontinue to accept buy-ins through the end of February.

|

In line with the company's standard model, Alexander saysSurgical Development has a minority position in the partnership,holding "significantly less than 49%." It also has a signedmanagement contract to operate the hospital. Alexander says themedical office building is fully leased. But, he adds the companyis exploring the possibility of developing a second one on theundeveloped 6.4 acres.

Want to continue reading?
Become a Free ALM Digital Reader.

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.