Healthcare Trust Buys 8-Property Medical Office Buildings for $141M

Healthcare Trust of America closed out 2013 with a total of $398 million in investments in medical office properties, including an eight-property portfolio purchase for $141 million.

Largo Medical Center, Largo, Florida

Healthcare Trust of America, Inc. closed out 2013 with a total of $398 million in investments in medical office properties, including $156 million in acquisitions in the last three months.

“It was a strong fourth quarter,” Mark Engstrom, HTA’s executive vice president – acquisitions, told Commercial Property Executive.

The biggest acquisition of the fourth quarter for the Scottsdale, Ariz.-based healthcare REIT was an eight-property portfolio of medical office buildings bought from a Florida developer for $141 million. Seven of the assets were in Florida in the Jupiter, Tampa Bay and Largo areas as well as other locations in South Florida, Engstrom said. Also included in that portfolio was one medical office building in Fort Wayne, Ind., where HTA already owns a medical office building developed by the same builder, he added.

“It’s consistent with our investment strategy over the last five years. We really focus on local and regional developers as a source of opportunity for us,” Engstrom said. “Those (acquisitions) as well as those in Austin were reflective of that strategy.”

Engstrom was referring to the remaining fourth-quarter acquisitions, which were the purchase of two medical office buildings in Austin, Texas, for $29 million.  He said the two buildings totaled about 100,000 square feet.

The Florida portfolio comprises more than 414,000 square feet and is anchored by the Largo Medical Center Medical Office Building, a 151,000-square-foot, Class A property located in Largo. It is on the campus of HCA’s Largo Medical Center. Other properties in the Florida portfolio are on campuses affiliated with HCA, Community Health Systems and the Jupiter Health System.

Engstrom said all of the medical office buildings acquired in the fourth quarter are either on hospital campuses or located close to them and are all stabilized properties that are 98 percent leased. He said those acquisitions “form the real core of our investment strategy” as the REIT seeks out “strong markets with “strong health systems.”

He noted that 80 percent of the REIT’s acquisitions in 2013 were in Florida and Texas.

“Texas is growing fast economically and demographically,” Engtrom concluded. “Florida is seeing a strong rebound in the local economy.”

HTA acquired 22 medical office buildings in 2013 totaling almost 1.5 million square feet of leasable space. At year end, HTA’s portfolio consisted of more than 14.1 million square feet of gross leasable area and represented $3 billion in investments.

Engstrom said 91 percent of the portfolio consists of medical office buildings. The remaining 9 percent includes rehabilitation hospitals and senior care facilities. Going forward, he said, HTA would stay focused on medical office buildings as acquisition targets.