NGKF Helps Trade Phoenix Portfolio for No Small Change

By Scott Baltic, Contributing Editor

Physicians Realty Trust, of Milwaukee, has completed the $141 million purchase of a four-building, 406,890-square-foot portfolio of Class A medical office buildings in Phoenix, it was announced last Friday by Newmark Grubb Knight Frank, whose Phoenix office and Global Healthcare Services arm collaborated in representing the seller, Integrated Medical Services.

The sale reportedly sets a record as the highest price paid — at $347 per square foot — for an on-campus, multi-tenant medical office portfolio in metro Phoenix.

The NGKF team included Global Healthcare Services executive managing directors Garth Hogan and Todd Perman, as well as directors Trisha Talbot and Kathleen Morgan of the Phoenix office. The buyer was self-represented.

Avondale IMS building

“This portfolio commanded such a high price because of the quality of the buildings and its ownership by physician-led organizations. It’s rare to have such a collection of trophy assets built by doctors who are immersed in the healthcare community,” NGKF’s Hogan said in a prepared statement.

“This sale provided an important opportunity to monetize our assets at a point when we knew we’d gain the greatest value,” said John Dover, M.D., the management representative for the sellers, said in the same statement.

The properties were built from 2004 to 2009 and three are on hospital campuses. The buildings are Paradise Valley IMS (122,790 square feet), North Mountain IMS Medical Building (121,976 square feet), Palm Valley Medical Office Building (101,241 square feet) and Avondale IMS (61,614 square feet).

Founded in 2006, Integrated Medical Services is, according to its website, a physician-led, multi-specialty organization that includes about 140 providers and 65 locations.

The portfolio is currently 96 percent leased. IMS leases 67 percent of the portfolio’s square footage, hospital systems lease 23 percent, and independent physicians/providers lease 6 percent, an NGKF spokesperson told Commercial Property Executive.

Although other tenants besides IMS are involved in the deal, “it’s very much like a sale-leaseback transaction,” PRT president/CEO John Thomas told CPE. Over the past five or six years, he added, the average medical office building transaction has been in the $20 million to $25 million range, and very few have exceeded $100 million.

In early February, PRT closed on the purchase of a seven-building, 362,000-square-foot portfolio of MOBs in metro Minneapolis for $105.4 million. The seller was The Davis Group, which had developed the buildings and retained a minority interest, as well as leasing and management responsibilities.