MUSKOGEE, OK-Grubb & Ellis Healthcare REIT II Inc. hasacquired the 41-bed Muskogee Long-Term Acute Care Hospital for $11million from Muskogee LTACH LLC in an all-cash transaction.

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The 37,000-square-foot facility is the fifth purchase for theREIT, which focuses primarily on medical office buildings and otherhealthcare-related facilities. It plans to raise $3 billion,and as of May 21, 2010, it had raised $57.9 million, according torecent filings with the SEC.

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Located at 351 South 40th St., the Class A, one-story hospitalis 100% occupied by Solara Hospital Muskogee LLC under a triple netlease that runs through Nov. 29, 2021. The lease isguaranteed by Solara Healthcare, LLC, a privately owned operator ofseven long-term acute care and other healthcare relatedfacilities.

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“When we buy an asset, the number one metric we look at is thestrength of the healthcare delivery system,” says Danny Prosky,president and COO of Grubb & Ellis Healthcare REIT II. “Wethink any upside potential is based heavily on the operator, andSolara is a terrific operator. They’re doing very well at thislocation, and they should continue to do well.”

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That means Grubb & Ellis Healthcare REIT II will have anopportunity increase rent when the lease comes up for renewal,Prosky tells GlobeSt.

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Muskogee Long-Term Acute Care Hospital is an extended-stayspecialty hospital for chronically ill and rehabilitation patientswhose average length of stay is 25 days or more. The next closestlong-term acute care hospital is approximately 40 miles away inneighboring Tulsa.

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Situated on roughly 3.7 acres, the facility is located in themidst of a thriving medical community. The 329-bed MuskogeeRegional Medical Center is within one-half mile, the 140-bed JackC. Montgomery Veterans Affairs Medical Center is within 1.25 milesand Muskogee Community Hospital, a newly-built, 45-bed communityhospital, is within approximately five miles.

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The four-year-old facility’s close proximity to threesignificant medical centers enables it to receive a steady sourceof patients in need of long-term care, Prosky notes. The hospitalhas an option to expand by 10 beds if and when demandincreases.

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Prosky says Grubb & Ellis Healthcare REIT II chooses itsacquisitions in an effort to diversify the payor mix – a term todescribe the source from which healthcare facilities generate theirincome. Muskogee Long-Term Acute Care Hospital, for example,generates income primarily from private pay insurance andMedicare.

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Muskogee Long-Term Acute Care Hospital is Grubb & EllisHealthcare REIT II’s first acquisition in Oklahoma, and Prosky sayshe “would not be surprised” if the REIT makes additional buys inthe state. “We think Texas and Oklahoma are great markets forhealthcare assets,” he concludes.

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Philip Camp and Jay Miele of Shattuck Hammond Partners brokeredthe sale of Muskogee Long-Term Acute Care Hospital.

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