Dissecting the Recent LaSalle/HCT Deal…
Many veteran investors in medical office properties are familiar with LaSalle Investment Management. LaSalle, by many accounts, was the first institutional private equity investor to raise a fund focused on medical office properties. Steve Bolen joined LaSalle in 2000 to launch the MOB practice. They have ultimately invested in over 80 medical office buildings in a couple of dedicated medical office funds as well as some separate accounts and the firm’s core open end fund. All totaled, LaSalle has invested in about $1.3 billion of MOBs. LaSalle has recently sold some of it’s assets in MOB Fund II. This fund has closed on 2 separate groups and American Realty Capital’s Healthcare REIT II (NYSE: HCT) has been the buyer. This post will examine the second portfolio, most of which has been closed by ARC.
The 2nd portfolio involved 13 MOBs and 534,000 square feet in 5 states. The total aggregate price of this part of the deal was $136 million which works out to $256 per square foot. Per an 8K filed, the cap rate on the deal works out to 6.14%. The portfolio was 92% leased at the end of 2013 and Trinity Health of Michigan was the largest tenant, comprising 11% of the portfolio’s rental income. As part of the deal, HCT paid $343 per foot for the Bowie Gateway Medical Building in Bowie MD. The anchor tenant in this class A 36,000 square foot building is Anne Arundel Health System.
Here are the properties involved in the deal – click on the property name to see the respective Revista Property View Report. The properties without a link are not yet in our coverage area.
|Name||State||Square Feet||Purchase Price||PPsqft||Confidence||Affiliated?||On Campus?||Building Class|
|Bowie – AAHS||MD||36,260||$12,450,000||$343||Confirmed||Yes||No||A|
|Stockbridge Family Medical||GA||19,822||$3,120,000||$157||Confirmed||No||No||B|
|Village Center – Stockbridge||GA||25,051||$4,100,000||$164||Confirmed||Yes||No||B|
|Benedictine/Health Alliance St. Mary’s||NY||35,461||$10,673,247||$301||Allocated||Yes||Yes||B|