IRET Buys $111M Worth of Medical, Housing

The company said in a statement that it has completed its purchase of eight senior housing facilities, made up of 329 beds, for about $44.7 million, from affiliates of Edgewood Vista Senior Living Inc., a developer and operator of these types of properties. The trust also expects to close within the next several weeks on the acquisition of a two-building senior housing complex, consisting of two single-story facilities totaling about 103,000 sf and 184 beds, for $14.8 million. A spokesman did not return calls for comment.

The eight properties include an 18,488-sf property in East Grand Forks, MN; a 5,192-sf facility in Belgrade, MT; an 11,800-sf property in Billings, MT; a 5,194-sf facility in Columbus, NE; a 5,185-sf property in Grand Island, NE; a 5,135-sf facility in Norfolk, NE; a three-story, 156,001-sf complex in Fargo, ND; and a 11,800-sf property in Sioux Falls, SD. The trust is leasing the properties, including the one to be acquired, to subsidiary companies of Sunwest Management Inc., which is acquiring the assets of Edgewood.

As part of the above deal, the trust also bought out certain options held by Edgewood, rights that would have allowed Edgewood to purchase 11 existing senior housing facilities owned by IRET. The trust paid another $14.8 million to extinguish the purchase options, for facilities with about 741 beds in North Dakota, South Dakota, Minnesota, Nebraska and Montana. These properties, along with the other nine, will be leased to Sunwest for 21 years with the reinstated purchase options.

In a separate deal, the trust also has purchased six medical office buildings in the Minneapolis area from local private investors, though three of the properties had leasehold interests acquired only, according to the statement. The trust paid $6.9 million in cash, assumed $17.8 million in financing, placed new financing of $21.9 million and caused the issuance of about 567,000 limited partnership units of its operating partnership, IRET Properties, valued at $9.45 per unit or about $5.4 million in total. The portfolio is 99.5% leased, according to the statement.

The medical buildings include three of the five floors at 6405 France Medical in Edina; a 70,934-sf facility at 6363 France Medical; the 57,212-sf Riverside Medical property in Minneapolis, the 53,466-sf Ridgeview Medical facility in Burnsville; a 36,199-sf property known as Ridgeview South in Burnsville; and a 17,640 facility at 1440 Duckwood in Eagan, MN.

Thomas Wentz Jr., SVP of asset management and finance for the trust, said in the statement that Minneapolis is a core market. "In particular, we believe that our existing ownership of the Southdale Medical Building in Edina, MN, which we are currently expanding…will permit us to achieve attractive operating and leasing efficiencies," he said in the statement.

His father, company president Thomas Wentz Sr., said in the 2007 company report that expansion was going to be a goal for this year. "We will continue our efforts to expand our diversified portfolio and to focus on our core markets in the north central and Midwest states in which we have the majority of our properties," he said in the report.