McShane, NHP Form JV, Buy $50M Med Portfolio

The JV closed on the final 28,000-sf property on Wednesday. The portfolio includes four on-campus medical office buildings, including the 115,481-sf Heart Center, the 103,350-sf Medical Plaza and two other buildings nearby totaling 89,742 sf. These properties are all near the St. Anthony's hospital, the third largest medical center in St. Louis. Three off-campus urgent care centers were also acquired, including the 28,157-sf Fenton Urgent Care Center, the 49,660-sf Lemay Urgent Care Center and the 18,146-sf Arnold Urgent Care Center.

The portfolio's proximity to the hospital was one of the best reasons for the purchase, says Alex Hlavacek, COO with McShane. "St. Anthony's has a strong reputation for clinical care, as well as being financially strong," Hlavacek says. The properties are about 90% leased, with the medical center itself leasing nearly 40% of the portfolio.

Ray Braun, president of McShane's medical group, says Nationwide sought them out as a growth tool. "They have good access to capital, and they needed someone like us to cover a territory," he tells GlobeSt.com. "Plus, besides acquisitions, we also have construction and development expertise."

He says the medical office market, both here and nationally, is very stable, with a lot of growth as more capital is attracted to the sector. "It just doesn't operate the same as a traditional office," Braun says. "The demand characteristics are different. Physicians need to be close to the hospital, a need that other office users don't have. You work with a lot of tenants, they can look for a much wider range when looking for office space. Plus you have longer leases that are covered by the hospital system, and the tenants don't tend to move around the buildings like traditional office tenants."

Hlavacek agrees that the hospital needs are key to following where its office requirements are going. "Mostly across the country, hospitals are expanding, and the medical office needs are going to grow right along with that expansion. You're not going to see that trail off, even in this economy," he tells GlobeSt.com.