CHICAGO—There's quite an interesting history behind a portfolio of 14 medical office assets recently put on the market for investors to bid on.

The portfolio is being offered by Lillibridge Healthcare Services Inc., one of the pioneering firms in the medical office building (MOB) sector and now a division of the granddaddy of all healthcare real estate investment trusts (REITs), Ventas Inc.

Lillibridge, founded in late 1997 by Todd W. Lillibridge and Sydney P. Scarborough, accumulated the buildings in the late 1990s and early 2000s as part of the firm's first MOB fund, which was, in all likelihood, put together in conjunction with longtime joint venture (JV) and financial partner Heitman LLC, a real estate investment management firm.

When contacted by Healthcare Real Estate Insights^™, executives with both Heitman and Lillibridge declined to comment about the portfolio offering.

But what is known is that the so-called LHT Medical Office Portfolio hit the market in mid-March and has more than 1.2 million square feet. The five-state collection of MOBs would provide an investor with “instant scale,” according to materials from the Healthcare Capital Markets Group of CBRE Group Inc. 

All of the properties in the debt-free portfolio are hospital-affiliated, with 11 being on hospital campuses with “preferred ground leases.” About 24 percent of the space is leased by investment grade or publicly-traded health systems, according to CBRE.

HREI™ has determined that the portfolio includes assets affiliated with these five systems in these five major metropolitan areas: Emory Healthcare in Atlanta; MemorialCare Health System in Laguna Hills, CA; CHRISTUS Health in San Antonio; Abbott Northwestern Hospital, part of Allina Health, in Minneapolis; and Tennova Healthcare in Knoxville, TN.

Lee Asher and Chris Bodnar, senior VPs with CBRE's Healthcare Capital Markets Group, are spearheading the portfolio marketing effort. In an interview, Bodnar said that a confidentiality agreement prevents him from discussing specific details such as the seller, individual vacancy rates, tenant lease structures, and others.

He was willing, however, to provide some general comments. “This is a rare opportunity for an investor to control a critical mass of medical real estate coast to coast, offering instant scale and credibility. At 66 percent occupancy and expected pricing significantly below replacement cost, this portfolio offers considerable upside for a new owner.”

Noting that 97% of the total square footage is on hospital campuses, he said the portfolio provides access to prominent health systems in geographic markets with appealing demographic trends.

Asked what kind of buyer would have the ability to acquire a portfolio of this magnitude, Bodnar responded: “This is actually an average-size portfolio for many institutional investors who focus across all property types. We believe portfolio buyer activity will come from REITs and institutional funds who have the wherewithal to do an all-cash deal.”

With demand remaining strong for MOBs nationwide, Bodnar called the interest in the portfolio “very strong interest at both the portfolio and individual property level.”

Murray W. Wolf is the founder and publisher of Healthcare Real Estate Insights™, the nation's first and only publication totally dedicated to covering news and trends in healthcare real estate development, financing and investment. For more information, please visit www.HREInsights.com.