CNL Healthcare Acquires 9 Medical Office Buildings

By Scott Baltic, Contributing Editor

CNL Healthcare Properties, an Orlando-based REIT specializing in senior housing and healthcare facilities, has acquired from developer Meadows & Ohly, of Atlanta and Charlotte, a portfolio of nine Class A medical office buildings for about $238 million, CNL announced Monday. The transaction, which encompasses about 907,300 square feet of rentable space in North Carolina and Georgia, was one of the largest medical facilities deals of the year.

In addition, the acquisition reportedly makes CNL one of the nation’s largest third-party owners of medical properties, with 100 assets, including seniors housing facilities. CNL has now invested about $825 million in medical office buildings and acute-care and post–acute-care medical facilities.

The nine properties in this latest transaction are collectively 92 percent leased and will continue to be leased and managed by Meadows & Ohly on behalf of CNL Healthcare Properties.

The buildings range in age from less than five years to more than 25 years, according to a CNL spokesperson.

“CNL Healthcare Properties was looking to broaden its ownership and geographic and health system diversity within our medical facilities portfolio, and these properties helped to meet all of those objectives,” James Schmid, vice president of healthcare acquisitions for CNL Financial Group, told Commercial Property Executive.

Three of the nine buildings are part of the Novant Presbyterian Medical Center campus in downtown Charlotte and are primarily occupied by Novant Healthcare:

* Midtown Medical Plaza, a 218,489-square-foot medical office building;

* Presbyterian Medical Tower, a 147,492-square-foot medical office building; and

* Metroview Professional Building, an 86,768-square-foot medical office building.

The other six properties are:

*  Physicians Plaza Huntersville, a 101,525-square-foot medical office building in Huntersville, N.C., primarily occupied by Novant Healthcare and part of Huntersville Medical Center.

* Matthews Medical Office Building, a 96,346-square-foot medical office building in Matthews, N.C., primarily occupied by Novant Healthcare and within Matthews Medical Center.

* Outpatient Care Center, a 44,332-square-foot medical office building adjacent to Haywood Regional Medical Center in Clyde, N.C., and occupied entirely by outpatient services groups owned by the medical center, a joint venture between LifePoint Hospitals and Duke Medicine.

* 330 Physicians Center, a 109,823-square-foot outpatient medical office building within Floyd Medical Center in Rome, Ga., and fully leased to the medical center and to the Harbin Clinic.

* Spivey Station Physicians Center, a 55,347-square-foot outpatient medical office building in Jonesboro, Ga., primarily leased to Southern Regional Health System.

* Spivey Station Surgery Center, a 47,159-square-foot outpatient medical office building in Jonesboro, Ga., primarily leased to an ambulatory surgery center owned and operated by Southern Regional Health System.

“Healthcare real estate has been one of the hot sectors for the past few years,” Mindy Berman, managing director of Healthcare Capital Markets for JLL, told CPE. Prices have been rising significantly, she said, reflecting the fact that investors “are better understanding the property type” and the superior returns it can offer.

Deals of this size are unusual in the medical office sector, Berman said, in large part because a high proportion of properties are still owned directly by healthcare systems.

The CNL–Meadows & Ohly deal appears to have been surpassed this year in the healthcare space only by the August sale for $283 million of a mostly newer, Class A portfolio aggregated by Harrison Street Real Estate Capital. That portfolio consisted of 655,660 square feet in seven medical office buildings, three in-patient rehabilitation hospitals and two short-term acute-care hospitals in Florida, Texas, Nevada, Oklahoma, South Carolina and Indiana.

Berman and JLL vice president Daniel Turley represented Harrison Street in that transaction.