The 20-building medical office portfolio is near hospitals in California, Florida and Texas. The buildings are master leased to Tenet Healthcare Corp., who owns and operates hospitals in close proximity to 10 of the 20 buildings in the portfolio.
Tenet subleases the buildings primarily to doctors, physicians and other medical office users. "The properties contain value as single-tenant [Tenet] or multi-tenant medical office buildings, office buildings and potential redevelopment sites," says SKB president Todd Gooding.
SKB chairman and CEO Bob Scanlan notes that the portfolio stands to benefit from strong healthcare real estate fundamentals. Those fundamentals include an increasing number of aging Baby Boomers fueling employment growth within the sector and, therefore, demand for office space.
"Additionally, doctors typically sign longer-term leases--seven or eights years--and renew at greater frequency--80 to 90%--than traditional office tenants, according to research by Cain Brothers, a New York investment bank focused on the healthcare industry," Scanlan adds. "Investors are attracted to the sector due to the more predictable occupancy patterns."
The $43.1-million retail portfolio includes nine former grocery stores and two gas station parcels in Arizona, California and Colorado. The properties were part of a 65-store portfolio that Albertson's sold in 2006 to an institutional investment group led by Cerberus Management and Kimco Realty Corp. The group subsequently ceased operations at most of the properties.
SKB plans to enhance the properties' value by creating attractive single- or multi-tenant retail assets and then bring them back to market upon stabilization. The company has retained Blake Hunt Ventures to assist in the repositioning, as well as retail redevelopment specialists Mena Architects and WR Layne Construction & Engineering. Staubach and Colliers International are the leasing agents.
"The portfolio is 25% preleased to Ross, Staples and Office Depot and leases in negotiation would fill an additional 21% of the space with timing and economics that exceed pro forma expectations," says Gooding. "All of the stores are less than 20 years old and divisible into two- or three-tenant floor plates."
Most of the properties are located in or near Phoenix, where, according to SKB, population growth has far outpaced the national average and where the overall average retail vacancy is currently 5.1%. The one California asset is located in the Northern California city of Pittsburg, where retail vacancy is currently 3.9%. The Colorado asset is located in the City of Highlands Ranch, where retail vacancy is 4.7%.The Praedium Group was unable to comment by deadline regarding the deal.
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
