ARLINGTON, TX—Most healthcare real estate (HRE) professionalsand investors will be glad to know that there are still independentphysician groups in the marketplace that are willing to sell, ormonetize, the facilities they own and remain tenants in thebuildings.

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While such scenarios are becoming less common because so manyindependent physicians and group practices are being sold to largehealth systems, a successful, independent orthopedics group inArlington, Texas, recently agreed to sell its twofacilities to help fuel more growth and to capitalize on currentstrong pricing for medical office buildings (MOBs).

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According to brokers representing Arlington OrthopedicsAssociates (Arlington Ortho) in the offering, a buyer hasbeen chosen but not named. A closing is expected soon, according tothe brokers, who are part of the Healthcare Capital Markets groupin the Boston office of JLL. They areDaniel Turley, a VP; MindyBerman, a managing director; and StevenLeathers, a senior VP.

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The final sales price has not been announced, but it is expectedto be quite strong based on the current scarcity of high-qualitymedical properties on the market. The portfolio was included as a“Hot Property” in the May issue of Healthcare Real EstateInsights.

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“Values are attractive for good buildings such as this right nowand for a group like this, a highly successful practice, monetizingreal estate is a way to take a few chips off the table since theyare not going to sell the practice,” Berman says.

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One of the buildings, the group's main facility, is a 37,100square foot MOB at 800 Orthopedic Way in Arlington, next door tothe Baylor Surgicare at Arlington building. It wascompleted in 2003.

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The other is a 12,560 square foot MOB at 2801 E. BroadSt. in Mansfield, a dozen or so miles south of theArlington MOB. The group completed the Mansfield building, which isnext to the 168-bed Methodist Mansfield MedicalCenter, in 2012 in order to provide more convenientservices for patients in the southern part of the Mid-Citiesarea.

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The facilities are “pure MOBs,” Turley says, that are home toclinical space, physical therapy and imaging; there are no surgerycenters. Instead, group's physicians conduct surgeries at Baylorfacilities, including the 24-bed Baylor Orthopedic &Spine Hospital at Arlington (BOSHA). The group's doctorsare the only surgeons on staff at BOSHA and are 49.9 percent ownersof the operations, with Baylor owning the remainder.

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Upon the closing of the real estate, Arlington Ortho plans toenter a 12-year net lease with annual escalators of 2 percent andextension options for an additional 10 years. The buildings wereoffered on a fee simple basis, free and clear of debt, according toJLL.

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John B. Mugford is the Editor of Healthcare Real EstateInsights™, the nation's first and only publication totallydedicated to covering news and trends in healthcare real estatedevelopment, financing and investment. For more information, pleasevisit www.HREInsights.com.

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