Healthcare REIT Closes First Leg of $40M Deal

The Santa Ana, CA-based buyer will pay $9.7 million to Health Care Property Investors Inc. of Long Beach, CA for the remaining two assets, both of which are in California. The second closing will take place by May. All assets are master-leased to Southwest LTC of Dallas and will continue to be run by the company.

"We're trying to build more of a geographic focus for our REIT. We're already active in the Southeast, Midwest and Texas and want to do more," says Danny Prosky, vice president of acquisitions for the buyer. He adds that the 80-bed Meadow View Assisted Living at 2815 Medlin Dr. in Arlington, TX, is the REIT's first Dallas/Fort Worth acquisition.

Prosky tells GlobeSt.com that the portfolio was appealing because of its high-quality operator and good rental coverage. The facilities were built during the early 1990s and are 100% occupied. "The operation of the facilities generated enough EBIDTA to work well and that's what we look for," he adds.

Grubb & Ellis Healthcare REIT was launched in early 2006 as NNN Healthcare/Office REIT Inc. Prosky says the REIT has a three-year equity raise. In its SEC filing, the maximum equity raise is $2.2 billion.

Prosky says anything bought on behalf of the REIT will automatically have a long-term hold, with the exit strategy being a total liquidation of the REIT. At some point, he adds investors will want that exit strategy, but there is no specific date for one at this point.

In addition to the Arlington asset, the REIT bought Gulf Health Care Centers at 6600 Ninth Ave. in Port Arthur, 3702 Cove View Blvd. in Galveston and 1720 N. Logan St. in Texas City. Each facility has 150 beds, a rehabilitation gym and various programs for short-term and intermediate-term care.