NFL Legend's Firm Pays $34M for MOB
PortfolioGlobeSt.com Commercial Real Estate News and Property Resource
http://www.globest.com/news/1208_1208/other/172638-1.html
Last updated: Monday, July 28, 2008
By Gina Kenny
APPLETON, WI-The Sanders Trust has acquired a five-building medical office
portfolio for $34 million from ThedaCare, a healthcare provider based in Fox
Valley, WI. The 225,000-sf package is 98% leased.
The portfolio consists of the Medical Office Building West, Medical Office
Building South and Appleton Heart Institute, all located on the Appleton Medical
Center campus at 1818 N. Mead St. in Appleton, WI, and the Medical Office
Pavilion at 200 Theda Clark Memorial Plaza at the Theda Clark Medical Center in
Neenah, WI. The portfolio also includes two upper floors of the Aylward Surgery
Center at 100 Theda Clark Memorial Plaza, says Rance M. Sanders, CEO of
Birmingham, AL-based Sanders Trust.
The portfolio sold for close to $151 per sf, which is a "good bit below
replacement cost," Sanders says. All buildings are attached to hospitals, which
makes it an attractive acquisition as well as attractive for patients and
clients, given the Wisconsin winters, he explains.
"Based on the NOI that we underwrote, the cap was 7.1%," Sanders tells
GlobeSt.com. Lease rates vary depending on the campus, but he says it generally
is about $22 per sf, full service.
Sanders says ThedaCare will retain ownership of the land, signing a 75-year
ground lease with Sanders Trust. As part of the ground lease, ThedaCare has
required all building tenants to be "members of the active medical staff at both
hospitals."
The buildings were constructed between 1990 and 2007. The Sanders Trust plans to
spend about $600,000 to renovate the structures, including "extensive common
area improvements in most of the buildings" and replacement of roofs on two or
three of the buildings, according to Sanders.
The acquisition of the portfolio is the Sanders Trust’s first foray into
Wisconsin. Former Green Bay Packer quarterback Bart Starr, vice chairman of the
Sanders Trust, was responsible for developing the acquisition. Mike Davis and
Sean Tu, both with Cain Brothers, were investment advisers to ThedaCare.
ThedaCare owns four hospitals and 20 physicians' locations in addition to senior
residential facilities. The healthcare system has 36% of the market share, which
also made the portfolio quite appealing because the trust "always wants to
partner with the number one provider of their community," Sanders says.
The healthcare system reportedly plans to apply sale proceeds to a $90-million
expansion and renovations at Appleton and Theda Clark medical centers. "As with
many not-for-profit hospitals, they prefer to focus their capital on pure
mission activities," Sanders says. "The real estate is non-core to their
mission."
Sanders says the trust's typical holding period is at least 10 years and that is
the plan for the portfolio as well. Sanders Trust has developed and acquired
more than $265 million of healthcare properties, with its existing portfolio
totaling 20 properties in 10 states and valued at $135 million.
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