OKLAHOMA CITY-Grubb & Ellis Healthcare REIT has pushed into the market with the acquisition of two medical office buildings on the Deaconess Hospital campus in the northwest corridor. The REIT has forked over $29.25 million plus closing costs to co-owners Deaconess Health Care Corp. and Altera Development Co. LLC of Dallas.
Danny Prosky, executive vice president of acquisitions for Grubb & Ellis Healthcare REIT, says there was a great deal to like about the two-building portfolio. He points out that Deaconess Health Care is one of the largest publicly traded community healthcare companies in the US. In addition, the 126,000-sf building at 5401 N. Portland Ave. is physically attached to the 313-bed hospital and the 61,000-sf building at 5701 N. Portland Ave. is accessible through a tunnel. He says neither building requires much in the way of upgrades, beyond the standard carpet replacement and fresh paint.
The larger building, which just underwent a close to 70,000-sf expansion, is 96% leased to 16 tenants while its smaller cousin is 86% leased to 17 tenants, which he says translates to a nice combination of steady income flow and upside potential. “We liked everything about this deal,” Prosky tells GlobeSt.com. “I’d like to do five of these a quarter. I wish they were all like this.”
According to its SEC filing, the REIT closed the deal with $29.7 million from its $80-million secured line of credit with Chicago-based LaSalle Bank and KeyBank in Cleveland. The deal included an $878,000 acquisition fee.
Senior associates Toby Scrivner and Jeff Matulis in Stan Johnson Co.’s Tulsa, OK office represented the sellers. The Santa Ana, CA-based Grubb & Ellis Healthcare REIT used in-house representation.
Prosky says the REIT’s acquisition criteria aren’t based on geography or market size as much as it is the healthcare system that a medical office asset is affiliated. “We like to be affiliated with strong healthcare delivery systems,” he says.