90 North Recaps Hospital System’s HQ in Cincinnati

1701 Mercy Health Place. Image courtesy of JLL

U.K.-based 90 North has completed the equity and debt recapitalization of Bon Secours Mercy Health’s headquarters in Cincinnati, in collaboration with a Kuwaiti investor.

90 North had purchased the 368,500-square-foot property located at 1701 Mercy Place in May 2017. The deal closed shortly after the Class A office building’s completion, with Sidra Capital of Saudi Arabia as the majority owner, Dan Cooper, 90 North partner & head of North America, told Commercial Property Executive.

The subsequent merger of Bon Secours and Mercy Health necessitated that the property be expanded. The new owner worked with the building’s tenant to fund and construct a new parking garage. A lease extension was negotiated as well, with now 14 years remaining.

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With that settled, and the original business plan nearing its conclusion, 90 North introduced a new investor from Kuwait, Rasameel Investment Co., as part of a transaction worth more than $100 million. Rasameel is now the sole owner, with 90 North as advisor and asset manager, Cooper told CPE.  

As part of the transaction, JLL Capital Markets arranged $65.5 million in financing, in the form of a five-year, sub-2.5 percent fixed-rate acquisition loan through PNC Bank.

The property’s amenities include a fitness center, large outdoor dining and activity area, food market, a walking/running trail encircling the campus and parking for more than 1,400 vehicles.

The five-story building is situated in Cincinnati’s Bond Hill neighborhood, about 10 miles north of the central business district. The property is adjacent to Ohio 52, which connects readily to I-75 and I-71, and is surrounded by retail centers, dining and golf courses.

The JLL Capital Markets team representing the borrower was led by Senior Managing Director Keith Largay and Director Lucas Borges.

Bon Secours Mercy Health is one of the nation’s largest Catholic healthcare systems and one of Ohio’s largest employers and operates 50 hospitals in the eastern U.S. and Ireland.

High vacancy

Last year, according to Cooper, Rasameel and 90 North purchased the headquarters of Ensemble Health in metro Cincinnati from a local developer. The 400,300-square-foot property in Blue Ash is net-leased to Ensemble, a medical billing management company, which executed a new long-term lease with the new ownership.

The Cincinnati office market has a vacancy rate of 19.9 percent, with most submarkets seeing negative absorption in the first quarter, according to a recent report from Cushman & Wakefield. Despite this, asking rents rose slightly, to $19.44 per square foot.

The Blue Ash submarket is broadly similar, with 21.3 percent direct vacancy, on an inventory of 4.4 million square feet, according to that same report.