Christus St. John Hospital Hawks Two Campus Buildings

NASSAU BAY, TX-A Dallas-based owner of medical facilities has purchased two office buildings, totaling 95,944 sf, from Christus St. John Hospital. Buyer and seller aren't talking price, but a local broker says the class B pair brought about $5 million.

Cambridge Capital Corp. marked a Houston inroad with the acquisition of the medical office buildings on the hospital's Nassau Bay campus, right across the freeway from the Johnson Space Center. The buildings are 88% occupied with long-term leases, all of which remain in place, according to the wholly owned subsidiary of Cambridge Holdings Inc. The buyer owns 12 other medical facilities in markets like Dallas, San Diego and northern New Jersey.

Neither building is adjacent to the hospital, but instead part of an extended campus developed in the mid-1980s. The package consisted of a 49,248-sf building built in 1986 on a half acre at 2060 Space Park Dr. and a 46,696-sf structure constructed in 1983 on 2.5 acres at 18100 St. John's Dr. The newer building was on the market for $3 million and the other one tagged at $2.2 million. Bill Forrest of Sperry Van Ness in Houston tells GlobeSt.com that the newer building probably brought $2.5 million to $3 million while the sister property most likely closed around $2 million.

On both buildings, Forrest pegs the average lease rate at about $13 per sf to $15 per sf, which is in line for older medical office properties in the Houston area. "Most of the older ones are in that range," he says. "Newer medical offices are going for around $18 per sf."

With an eye on a long-term hold, the buyer intends to begin renovations on the buildings within a few months and lease up the rest of the space "as soon as possible," says a source close to the deal. "They can use some upgrades."

A Cambridge spokeswoman says the firm was eager to break into the Houston market. "We look for strong hospital partners and good markets and this had both," she adds. "We are seeking medical office properties and these fit the profile." The hospital sold the properties in order to concentrate its core business, she says. Cambridge represented itself in the purchase while Christus was represented by William J. Byrd in Colliers International's Houston office.