$612.5 million MOB portfolio located on campus or fully leased to three leading health systems in Atlanta, Georgia
NASHVILLE, Tenn., Aug. 08, 2017 (GLOBE NEWSWIRE) — Healthcare Realty Trust Incorporated (NYSE:HR) today announced it has executed definitive agreements to purchase fifteen medical office buildings located in Atlanta, Georgia (the “Portfolio”) for a purchase price of $612.5 million. The properties are located on hospital campuses or fully leased to three leading health systems in Atlanta. The low fungibility and growth potential of the primarily on-campus properties enhance Healthcare Realty’s long-term internal growth profile. The acquisition is expected to be accretive to 2018 FFO and additive to net asset value
Consistent with the Company’s investment criteria, the Portfolio is:
- 100% associated with leading not-for-profit health systems
- 86% located directly on hospital campuses
- 100% located in a top ten metropolitan statistical area
The Portfolio is comprised of 1.3 million square feet, is 96.2% occupied, and has an average building age of 9.7 years. In 2018, the Portfolio is expected to produce net operating income of $29.9 million and generate a projected cash yield of 4.9%.
Similar to Healthcare Realty’s existing portfolio, the properties in the Portfolio are over 90% occupied by hospital-centric specialties, such as obstetrics/gynecology at 13%, oncology at 12%, cardiology at 11%, and orthopedics at 9%.
Each of the properties in the Portfolio is associated with three of the leading, not-for-profit health systems in Atlanta that collectively occupy 59.8% of the properties:
WellStar Health System (“WellStar”)
- Nine medical office buildings totaling 772,400 square feet, or 58.6% of the Portfolio
- Eight multi-tenant properties total 607,000 square feet, are located on three hospital campuses, and are 58.8% leased by WellStar.
- One single-tenant, off-campus property totaling 165,400 square feet will be fully leased by WellStar for 20 years upon completion of construction in September 2017.
- “A” rated WellStar operates 11 hospitals, generated $2.2 billion of revenue in 2016, and has a 21.0% market share, making it the leading health system in the Atlanta MSA.
Piedmont Healthcare (“Piedmont”)
- Three medical office buildings totaling 276,700 square feet, or 21.0% of the Portfolio
- Two multi-tenant, on-campus properties total 257,000 square feet, are located on two hospital campuses, and are 62.4% leased by Piedmont.
- One single-tenant, off-campus property totaling 19,700 square feet is fully leased by Piedmont for a remaining term of 12.7 years.
- “AA-“ rated Piedmont operates seven hospitals, generated $2.0 billion of revenue in 2016, and has a 14.5% market share, making it the third largest health system in the Atlanta MSA.
Gwinnett Medical Center (“Gwinnett”)
- Three medical office buildings totaling 269,400 square feet, or 20.4% of the Portfolio, are located on two hospital campuses and 32.3% leased by Gwinnett.
- “A3” rated Gwinnett operates two hospitals and generated $706 million of revenue in 2016.
- Gwinnett has publicly announced plans to merge with Northside Hospital (“Northside”), a health system that operates three hospitals and generated $2.8 billion of revenue in 2016.
- Gwinnett has a 6.2% market share and Northside has a 12.2% market share; the combined systems will become the second largest in the Atlanta MSA.
Healthcare Realty Trust is a real estate investment trust that integrates owning, leasing, managing, financing, developing, and re-developing income-producing real estate properties associated primarily with the delivery of outpatient healthcare services throughout the United States. As of June 30, 2017, the Company had gross investments of approximately $3.6 billion in 197 real estate properties in 26 states totaling approximately 14.5 million square feet. The Company provided leasing and property management services to approximately 10.9 million square feet nationwide.
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