Surgical Development Partners of Franklin, TN and about 50 local doctors received approval six days ago from the US Bankruptcy Court in El Paso to acquire the facility at 1416 George Dieter Dr. on the city's east side. The sale includes a neighboring 40,000-sf medical office building and 6.4 acres of adjacent land.
The purchase, financed by Health Care REIT of Toledo, OH, encompasses shares held by a partnership of 25 doctors who were the previous owners and original investors in the four-year-old hospital. The 25 doctors have all joined the new partnership.
According to Surgical Development president and CEO G. Edward Alexander, he learned of the potential buy from Health Care REIT before the property went into bankruptcy. When the previous owners decided to file for Chapter 11, they asked Alexander's company to make a bid they could use in court as a basis for valuation. "The court awarded us stalking-horse status," Alexander says. "The offer we made became the floor for any subsequent sale." Ultimately Surgical Development faced only one other bidder for the asset, Rockwall Hospitals Inc. of Richardson, TX. The winner was selected on the basis of price.
Alexander says he has been looking for opportunities in the El Paso market for four years. His company, which owns five other hospitals and five outpatient surgical centers in six states, including Texas, typically does ground-up development, but is open to attractive investment options in strong markets. He considers Physicians Hospital to be a highly promising asset that primarily needed a new infusion of working capital to fulfill its potential.
"The market is dominated by ACA and Tenet," he explains. "This is one of the few competitors to those big systems. In general, El Paso is a good market for healthcare. The military base is expanding very rapidly and service jobs tend to follow the military. Since the base is on the east side, growth has all gone east. We're right in the middle of the growth."
Alexander tells GlobeSt.com he pulled the investment group together by preparing a private placement memorandum and doing a syndication. He says he is seeking additional investors and will continue to accept buy-ins through the end of February.
In line with the company's standard model, Alexander says Surgical Development has a minority position in the partnership, holding "significantly less than 49%." It also has a signed management contract to operate the hospital. Alexander says the medical office building is fully leased. But, he adds the company is exploring the possibility of developing a second one on the undeveloped 6.4 acres.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
