ARLINGTON, TX—Most healthcare real estate (HRE) professionals and investors will be glad to know that there are still independent physician groups in the marketplace that are willing to sell, or monetize, the facilities they own and remain tenants in the buildings.
While such scenarios are becoming less common because so many independent physicians and group practices are being sold to large health systems, a successful, independent orthopedics group in Arlington, Texas, recently agreed to sell its two facilities to help fuel more growth and to capitalize on current strong pricing for medical office buildings (MOBs).
According to brokers representing Arlington Orthopedics Associates (Arlington Ortho) in the offering, a buyer has been chosen but not named. A closing is expected soon, according to the brokers, who are part of the Healthcare Capital Markets group in the Boston office of JLL. They are Daniel Turley, a VP; Mindy Berman, a managing director; and Steven Leathers, a senior VP.
The final sales price has not been announced, but it is expected to be quite strong based on the current scarcity of high-quality medical properties on the market. The portfolio was included as a “Hot Property” in the May issue of Healthcare Real Estate Insights.
“Values are attractive for good buildings such as this right now and for a group like this, a highly successful practice, monetizing real estate is a way to take a few chips off the table since they are not going to sell the practice,” Berman says.
One of the buildings, the group's main facility, is a 37,100 square foot MOB at 800 Orthopedic Way in Arlington, next door to the Baylor Surgicare at Arlington building. It was completed in 2003.
The other is a 12,560 square foot MOB at 2801 E. Broad St. in Mansfield, a dozen or so miles south of the Arlington MOB. The group completed the Mansfield building, which is next to the 168-bed Methodist Mansfield Medical Center, in 2012 in order to provide more convenient services for patients in the southern part of the Mid-Cities area.
The facilities are “pure MOBs,” Turley says, that are home to clinical space, physical therapy and imaging; there are no surgery centers. Instead, group's physicians conduct surgeries at Baylor facilities, including the 24-bed Baylor Orthopedic & Spine Hospital at Arlington (BOSHA). The group's doctors are the only surgeons on staff at BOSHA and are 49.9 percent owners of the operations, with Baylor owning the remainder.
Upon the closing of the real estate, Arlington Ortho plans to enter a 12-year net lease with annual escalators of 2 percent and extension options for an additional 10 years. The buildings were offered on a fee simple basis, free and clear of debt, according to JLL.
John B. Mugford is the Editor of Healthcare Real Estate Insights™, the nation's first and only publication totally dedicated to covering news and trends in healthcare real estate development, financing and investment. For more information, please visit www.HREInsights.com.
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