Griffin-American REIT II Makes $174M, 11-Property Pickup

Continuing in its quest for "stabilized assets that show cash flow above and beyond rent," according to president & COO Danny Prosky, the newly minted Griffin-American Healthcare REIT II has made an 11-property pickup for $174 million.

January 19, 2012
By Nicholas Ziegler, News Editor

Sierra Providence East Medical Plaza I in El Paso, Texas

Continuing in its quest for “stabilized assets that show cash flow above and beyond rent,” according to president & COO Danny Prosky, the newly minted Griffin-American Healthcare REIT II has made an 11-property pickup for $174 million. Ten of the properties are skilled-nursing facilities, and the remaining one is a medical-office building. Together, the portfolio totals approximately 454,000 square feet.

“Demand for healthcare services will only increase in the future,” Prosky told Commercial Property Executive. “As Baby Boomers continue to turn 65 over the next 18 years, and along with the general aging of the population, we’re bullish on growth and demand for the sector.”

The ten nursing facilities, built between 1969 and 1999, are master-leased through 2027 through affiliates of Wellington Healthcare Services L.P., and were acquired from unaffiliated third-party affiliates of the same. Griffin-American financed the acquisition through the assumption of nine Housing and Urban Development loans totaling $70.5 million, the assumption of a $12.7 million loan from Capital Funding Group, $38.4 million in borrowings under a credit line with Bank of America and $20 million in borrowings under a credit line with KeyBank. The remainder was funded from net cash proceeds received from the offering.

The ten facilities are located in Georgia, Tennessee, Alabama and Louisiana.

The remaining medical-office building, Sierra Providence East Medical Plaza I, is located on the 42-acre campus of Sierra Providence East Medical Center in El Paso, Texas. The property is 90 percent leased to 13 tenants. It was acquired from PHT Investment Holdings L.L.C..

Griffin-American is certainly making large strides in a short amount of time. As CPE previously reported, the REIT was declared post-effective by the Securities and Exchange Commission on Jan. 6 of this year after splitting from its original sponsorship under Grubb & Ellis Co. On Jan. 3, the entity was officially renamed from Grubb & Ellis Healthcare REIT II to Griffin-American Healthcare REIT II. To date, the REIT has purchased 66 buildings for an aggregate price of $605 million.

“The good news for healthcare is that demand is growing everywhere,” Prosky said.