Healthcare Trust to Add 960,000 SF to MOB Portfolio for $196.6M

With locations on and off hospital campuses, the MOB portfolio encompasses assets in Albany, N.Y.; North Adams, Mass.; and Temple Terrace, Fla.

October 29, 2010
By Barbra Murray, Contributing Editor

With the stroke of a pen, Healthcare Trust of America Inc. arranged to enhance its medical office building holdings by 960,000 square feet. The REIT orchestrated a deal to purchase nine Class A properties in states along the Atlantic Seaboard for approximately $196.6 million.

With locations on and off hospital campuses, the MOB portfolio encompasses assets in Albany, N.Y.; North Adams, Mass.; and Temple Terrace, Fla. The group of buildings has an average age of eight years and a 98 percent occupancy level with leases featuring a seven-year weighted average remaining term. Some of the tenant rosters bear the name of a single entity, while others list multiple businesses. Not only is the portfolio well leased, it is well leased to a bevy of credit-worthy tenants, including Catholic Health East, The State University of New York and LabCorp of America.

Mark D. Engstrom, executive vice president of acquisitions with Healthcare Trust, noted that the transaction continues the corporate focus to acquire high-quality MOBs with significant occupancy and strong credit tenants in strategic locations with dominant healthcare systems.

In October alone, Healthcare Trust has made three acquisitions, not including the recently announced transaction. This month, the REIT bought the 73,300 square-foot San Martin Medical Arts Pavilion on the San Martin Campus of St. Rose Dominican Hospital in Las Vegas for $19.1 million; the 105,000 square-foot medical office portfolio in Orlando for $18.3 million; and a 33,600 square-foot MOB in Santa Fe, New Mexico, for nearly $9.6 million. Year-to-date, Healthcare Trust has shelled out an aggregate $344.5 million to purchase MOBs and health-related properties totaling 1.5 million square feet.

Currently, all signs indicate that paying close attention to the MOB submarket of the office sector is a wise move. MOBs top the Urban Land Institute and PricewaterhouseCoopers’ Emerging Trends in Real Estate 2011 list of prospects for niche and multi-use property types, outpacing infrastructure, data centers and urban mixed-use properties. As per the report, “As baby boomers age, physician visits will soar [and] building and owning medical offices plays well into the expected demand wave.”