$37M Backs Deaconess MOB Buy, Expansion

Holliday Fenoglio Fowler LP associate director Mark Brandenburg has arranged a $17.6-million, 18-month loan through Guaranty Bank's Dallas office and a $19.65-million package, with a 10-year term and 18-month forward commitment, through GE Healthcare Financial Services' La Jolla, CA office. The new owner, who has requested anonymity, plans to start work in the summer to add three floors to the fully leased, three-story, 56,905-sf Deaconess South at 5701 N. Portland Ave. The other piece of the purchase is the four-story, 57,051-sf Deaconess North medical office building at 5401 N. Portland Ave., which is 99% filled by the hospital's administrative team and a cancer center.

Brandenburg tells GlobeSt.com that Deaconess Hospital and its 80% owner, Triad Hospitals Inc. of Dallas, rolled out the offering because "they wanted someone to come in to do the construction. They've been needing space for awhile." The medical office buildings are tied to 100-year ground leases, according to Brandenburg.

Brandenburg says the borrower negotiated a lease-to-own arrangement with the hospital that will allow physicians to accrue 70% ownership in the project. In the final lap, the new owner was racing against "all the big groups," he says. "It was a very competitive buy and sought-after loan as well." He adds that the names in the chase "made the lending community comfortable."

All Brandenburg will say about the borrower is it's an investor with a multi-faceted portfolio that includes medical office space. One local publication reported the new owner is Altera Development Co., but it's most likely a single-asset group since it's virtually unknown in Dallas healthcare circles.

The North Tower, built in 1990, and nine-year-old South Tower flank a 322-bed, acute-care hospital ranked as the city's leading cardiac and gastrointestinal facility. Deaconess Hospital, which opened in 1931 with 22 beds, is undergoing a $5-million expansion of the emergency room, cafeteria and parking.