Off-Market Agreement Turns Keys to Second Medical Office Asset

The fully leased, two-story building is located at 6435 S. FM 549 in Heath, a Rockwall County suburb 25 miles east of Dallas. Rainier previously bought a surgical center in Smyrna, TN, from the development partnership, which included St. Thomas Hospital System. A third medical office building is about to go under contract, J. Kenneth Dunn, president of the Dallas-based Rainier Capital Management, tells GlobeSt.com.

Rainier's latest acquisition is a newly delivered, medical office building, anchored by a 14,000-sf surgical center, on 4.8 acres. Dunn says TCC has an option to buy and a plan to develop an adjoining tract with additional medical office space. As for the leases, they have 10- to 15-year terms.

Rainier, on behalf of the TIC group, leveraged the purchase with a five-year loan with the Charlotte, NC-based Bank of America. David Mott in NorthMarq Capital Inc.'s Dallas office structured a package with a 65% loan-to-value ratio at a 5.36% fixed-rate interest, according to Dunn, who says the asset traded in the ballpark of $9 million to $10 million.

Rainier says the takedown agreement with TCC-USPI allows acquisitions to be locked in a year in advance of the project's completion. "We are buying forward," he explains. "We lock the rate, they lock the purchase price and we lock our spread between the underlying interest rate and cap rate." With the sales, TCC stays in place to lease and manage.

Negotiations began about eight months ago for the Heath development and the deal closed before its completion. Tenants are just now readying spaces for move-in to the two-story building. Richard Cole with Rainier Capital and Rob Jones with TCC in Dallas brokered the transaction.