Seavest Healthcare Properties LLC, a leading investor in the medical office sector, has divested two of its early discretionary investment funds comprising 14 medical office buildings (MOBs) in six states. The buyer, Duke Realty, paid $332 million for the properties. The transaction, which included assets totaling more than 1.2 million square feet, closed in a staged process from Oct. 5-31.
In terms of the price, this is believed to be one of the largest MOB portfolio sales in history outside of REIT M&A transactions.
"This historic transaction reflects the strength and stability of the MOB sector," says Douglas Ray, President and CEO of White Plains-based Seavest. "Seavest has been investing in healthcare real estate since the mid-1980s, and with interest rates and capitalization rates near historic lows and prices verging on historic highs, this was an appropriate time for us to sell these assets on behalf of our investors."
"The MOBs that changed hands consist of modern, class A properties affiliated with leading hospitals and health systems in their respective markets," Mr. Ray says. "In aggregate, the institutional-quality assets are approximately 90 percent leased, with hospitals and their affiliates accounting for approximately 63 percent of the occupancy. Virtually all of the MOBs are on hospital campuses, and were either built in conjunction with various development partners or acquired within the past 12 years."
Due to Seavest's long-standing relationships with the affiliated hospitals and the size and quality of the portfolio, the properties were offered to qualified institutional investors that were experienced managing and owning MOBs.
The transaction encompassed all of the remaining assets from Seavest Properties I and II. Three properties were included from Fund I (eight other assets from Fund I were sold in May 2011 to Grubb & Ellis Healthcare REIT II Inc.) and the remaining 11 were disposed from Fund II. (For details regarding the properties, please see the attached Fact Sheet.)
Seavest continues to acquire MOBs and partner with developers to build new properties in its third healthcare real estate fund, Seavest Properties III. "The firm is also preparing to launch a fourth fund and a new healthcare-focused REIT for institutional investors," Mr. Ray says. "For our health system relationships, we continue to provide long-term stable ownership and consistent quality management of every asset we own. This enables us to help our hospital and health system partners to achieve their strategic goals while creating significant value for our investors."
Evercore Partners acted as sole advisor to Seavest in connection with the transaction.
About Seavest Healthcare Properties LLC
Seavest Healthcare Properties LLC is a real estate investment management firm focused on the development of, acquisition and asset management of healthcare real estate assets. A pioneer in this sector, Seavest made its first healthcare real estate investments in the mid-1980s. Today, the firm controls a significant portfolio of medical office space and invests through dedicated healthcare real estate investment funds. For more information, please visit http://www.SeavestHCP.com or call (914) 683-8474.
Sellers: Seavest Healthcare Properties LLC, White Plains, N.Y., from its Seavest Properties I LLC and Seavest Properties II LLC investment funds
Buyer: Duke Realty, Indianapolis (NYSE: DRE)
Investment Bank: Evercore Partners, New York
Sale price: $332 million
Price per square foot: $267
Closing dates: Oct. 5-31, 2012
Properties included in the transaction:
a- Celebration Health Medical Plaza, Celebration, Fla., 77,461 rentable square feet. Affiliated with Florida Hospital Celebration Health.
a- Kissimmee Medical Plaza. Kissimmee, Fla., 79,438 rentable square feet. Affiliated with Florida Hospital Kissimmee.
a- East Orlando Medical Surgical Plaza, Orlando, Fla., 56,903 rentable square feet. Affiliated with Florida Hospital East Orlando.
a- Sebring Medical Pavilion, Sebring, Fla., 38,949 rentable square feet. Affiliated with Florida Hospital Heartland Medical Center.
a- U.S. Department of Veterans Affairs (VA) Outpatient Clinic, Sunrise, Fla., 107,000 gross square feet. Affiliated with the VA.
a- Longview Medical Office Building, Longview, Texas, 100,740 rentable square feet. Affiliated with Longview Regional Medical Center.
a- Hillcrest Baptist Medical Center I, Waco, Texas, 101,455 rentable square feet. Affiliated with Hillcrest Baptist Medical Center.
a- Hillcrest Baptist Medical Center II, Waco, Texas, 54,744 rentable square feet. Affiliated with Hillcrest Baptist Medical Center.
a- Medical Mall of Abilene, Abilene, Texas, 58,397 rentable square feet. Affiliated with Abilene Diagnostic Clinic.
a- The Green Clinic, Ruston, La., 98,007 rentable square feet. Affiliated with The Green Clinic.
a- Mountainview Medical Plaza, Las Cruces, N.M., 107,506 rentable square feet. Affiliated with Mountainview Regional Medical Center.
a- Fair Oaks Medical Office Building, Fairfax, Va., 100,948 rentable square feet. Affiliated with INOVA Fair Oaks Hospital.
a- Seton Professional Building, Mequon, Wis., 66,927 rentable square feet. Affiliated with Columbia St. Mary's Hospital.
a- Water Tower Medical Commons, Milwaukee, 153,820 rentable square feet. Affiliated with Columbia St. Mary's Hospital.
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