Healthcare Trust Goes on $84M MOB Shopping Spree

When it comes to occupancy levels, the medical office building sector has been faring a great deal better than the traditional office market, and Healthcare Trust of America Inc. is doing its level best to enhance its portfolio at a time when many office property owners are still sitting on the sidelines.

March 1, 2010
By Barbra Murray, Contributing Editor

Courtesy Flickr Creative Commons user brykmantra

When it comes to occupancy levels, the medical office building sector has been faring a great deal better than the traditional office market, and Healthcare Trust of America Inc. is doing its level best to enhance its portfolio at a time when many office property owners are still sitting on the sidelines.

In a short six-day period, the Scottsdale, Ariz.-based REIT announced four acquisition agreements for MOBs totaling 429,300 square feet from the Midwest to the South. Healthcare Trust will shell out an aggregate $83.9 million to add the properties to its rapidly growing list of holdings.

In Evansville, Ind., Healthcare Trust will snap up a five-building medical office portfolio encompassing 260,500 square feet for $45.7 million. A 53,700-square-foot portfolio of three MOBs in Hilton Head, S.C., is also on the REITs list of pending acquisitions. The portfolio, which carries a price tag of $15.3 million, contains two fully occupied structures and one building that has space available for lease.

With two deals in Texas, Healthcare Trust will increase the size of its Metropolitan Houston portfolio to more than 1 million square feet. The company plans to purchase the 60,300-square-foot Sugar Land Medical building II in Sugar Land for $12.4 million, and the 54,800-square-foot two-building portfolio in Pearland for $10.5 million. The Sugar Land property is 100 percent leased, while the Pearland complex boasts an average occupancy level of 99 percent.

It appears that Healthcare Trust is fast on its way to matching or overtaking its 2009 acquisition record. Last year, the REIT completed MOB transactions totaling $494 million. In January and early February of this year, before its most recent shopping binge, Healthcare REIT signed two deals totaling $49.1 million for properties encompassing an aggregate 182,000 square feet.

The MOB market has trumped the traditional office market all the way through the country’s economic downturn, and industry experts expect it to become even more stable in the future, particularly in light of a certain pressing issue with which the U.S. Congress is currently grappling.

“The heated topic of healthcare reform is especially relevant to the MOB market, as any measures passed by Congress could further bolster the sector,” according to Marcus & Millichap Real Estate Investment Services’ 2010 Medical Office Outlook Report. “It is estimated that if 50 percent of the 46 million individuals currently uninsured gained coverage, the added demand would require nearly 45 million square feet of MOB space beyond what is needed to satisfy normal demand trends.”