Western Real Estate Business magazine covers the multifamily, retail, office, healthcare, industrial and hospitality sectors in the Western United States.
Issue link: https://westernrealestatebusiness.epubxp.com/i/818922
50 • May 2017 • Western Real Estate Business www.REBusinessOnline.com H ealth may not be the first thing that enters your mind when you think of Nevada, but may- be it should be. For one, the economy is back on stable ground, with gam- ing, hospitality and tourism making great strides in the recent past. This has bolstered the state's employment rate, as well as its housing prices, set- ting the stage for a strong state that is not just alive, but ready to thrive. Many investors and developers are finding their latest opportunities to thrive within the healthcare and med- ical office building (MOB) sectors. Investing in Wellness Two of those investors are Ameri- can Healthcare Investors and Griffin Capital Company, which purchased the 191,000-square-foot Reno Medical Office Building, commonly known as St. Mary's Center for Health, this past March for an undisclosed sum. The Class A MOB sits on the campus of the 380-bed St. Mary's Regional Medi- cal Center in Reno. Though it is fully leased to seven tenants, the primary tenant is the medical center's opera- tor, Prime Healthcare Services. This premier location and ideal anchor allow the MOB to provide a variety of healthcare services, in- cluding wellness, physical therapy, obstetrics, gynecology, oncology, ra- diology, women's health, neurology, bariatrics and internal medicine to the Reno-Sparks region of Northern Ne- vada. These strong fundamentals also allowed the co-sponsors of Griffin- American Healthcare REIT IV to spot a potential long-term investment play. "Reno Medical Office Building is a trophy property and a fantastic acqui- sition for Griffin-American Health- care REIT IV," says Stefan Oh, execu- tive vice president of acquisitions for American Healthcare Investors and Griffin-American Healthcare REIT IV. "It is modern, attractive and enjoys a tremendous location on the campus of one of the premier hospitals in North- ern Nevada. Perhaps most important- ly, the vast majority of the building is leased to the operator of the hospital, which we believe may provide greater long-term stability and added value to the property." The building was purchased from an unaffiliated third party represent- ed by CBRE's Chris Bodnar and Lee Asher. The REIT financed the acquisi- tion using cash on hand and borrow- ings under its line of credit with Bank of America, N.A. and KeyBank, Na- tional Association. Erik Tellefson, managing director at Capital One, believes it not only takes an operator well-versed in healthcare real estate to make these deals pencil, but a little cash-on hand never hurt, either. This is particularly true, he notes, in the current interest rate en- vironment. "The primary change that we've seen over the past year in healthcare real estate is the increase in interest rates," Tellefson says. "Hedging inter- est rate risk is an important aspect of the lending process, and we are seeing more swaps and caps on floating-rate deals." Like Reno, the southeastern Las Ve- gas submarket of Henderson is also experiencing an increase in health- care-related activity as the economy has stabilized and more people have experienced what the town has to of- fer. Savant Investment Partners, a lo- cally based commercial real estate in- vestment and development company, is another investor that has taken no- tice. Savant purchased the two-build- ing Siena Office Park this past Feb- ruary for $12.6 million. The Class A property contains more than 101,000 square feet of MOB and traditional office space at 2850 W. Horizon Ridge Parkway and 861 Coronado Center within the Henderson medical corri- dor of Green Valley. Though Siena Office Park is not sit- uated on-campus, it is just one block from the St. Rose Dominican Hospital campus. The park also enjoys close proximity to the I-215 and the major arteries of Eastern Avenue and St. Rose Parkway. Savant plans to execute minor aes- thetic remodels to the suites, which range from 1,100 square feet to 25,000 square feet. Jordan Wirsz, founder and CEO of Savant Investment Part- ners, notes the company felt this was the right time to invest in Henderson as the entire Las Vegas Valley experi- ences significant levels of growth. He believes the remaining vacant spaces will quickly fill once the remodel is complete. "We couldn't be happier about this acquisition," Wirsz continues. "We be- lieve in the growth of Henderson and Green Valley, as well as the continued prosperity within the medical and professional office industries. With the acceleration of economic and busi- ness growth in the Las Vegas area, we are excited to add this property to our portfolio and continue to be a top-tier space provider in the community." NEVADA TURNS ITS FOCUS TO HEALTHCARE REAL ESTATE Healthcare real estate activity has picked up throughout the state now that the recovery is in full effect, housing prices are rising and the population is swelling. By Nellie Day Centennial Hills Center will house the build-to-suit rehab hospital. It will be situated about 15 miles north of Las Vegas.