$40M Waco Medical Office Project Under Way

As part of a new $184 million hospital campus in Waco, Texas, Seavest Inc., a White Plains, N.Y.–based investment management firm focused primarily on healthcare real estate assets, recently broke ground on two medical offices (pictured) totaling 166,000 square feet and together valued at $40 million.In addition to office space, the two office buildings will house the Hillcrest Breast Screening Center, an outpatient surgery center and outpatient imaging centers. The 74-acre campus at I-35 and Highway 6 will include two new hospitals, Hillcrest Community Hospital and Hillcrest Women’s & Children’s Hospital, and will partially replace the current facility on Herring Avenue two miles from the new site. When it’s completed next spring, the new 478,700-square-foot, 233-bed project will be the largest in the history of McLennan County. The 107,000-square-foot, three-story Hillcrest Community Medical Office Building will connect to the adjacent community hospital at a second-story skybridge. The skybridge will give physicians and patients easy access from the hospital to an ambulatory surgery center and imaging center that the hospital will lease in the office building. The 59,000-square-foot, two-story Hillcrest Women’s & Children’s Medical will serve the adjacent Women’s & Children’s Hospital with physician practices and services. The two office buildings are scheduled to be completed in summer 2009. Seavest president Douglas Ray told CPN that although financing is a challenge in the current environment, a long-standing relationship helped his company nail down a construction mini-perm loan with Guaranty Bank,  of Austin, Texas. The loan, which closed only about 45 days ago, runs for 24 months, with two one-year extensions, he said. Ray told CPN that Seavest will continue to own the buildings once they’re completed, with a master lease to the hospital system and potentially direct leases to tenants also. He estimated the company’s hold period at seven to 10 years. Hillcrest Health System includes Hillcrest Baptist Medical Center, a 393-bed acute-care hospital in Waco, and a network of primary-care clinics located in the region. The medical center is state-designated as a Level II Trauma Center and is also home to Waco’s only neonatal intensive care unit. The existing hospital, which dates to 1920, will retain its inpatient rehabilitation facility, which will be expanded and updated, and the Fentress Cancer Center. The healthcare system will also develop a skilled nursing facility and an inpatient traumatic brain injury program at the original building. Established in 1981, Seavest first began investing in healthcare real estate in the mid-1980s, and today it Controls a portfolio of more than 2 million square feet of medical office space.