MUSKOGEE, OK-Grubb & Ellis Healthcare REIT II Inc. has acquired the 41-bed Muskogee Long-Term Acute Care Hospital for $11 million from Muskogee LTACH LLC in an all-cash transaction.
The 37,000-square-foot facility is the fifth purchase for the REIT, which focuses primarily on medical office buildings and other healthcare-related facilities. It plans to raise $3 billion, and as of May 21, 2010, it had raised $57.9 million, according to recent filings with the SEC.
Located at 351 South 40th St., the Class A, one-story hospital is 100% occupied by Solara Hospital Muskogee LLC under a triple net lease that runs through Nov. 29, 2021. The lease is guaranteed by Solara Healthcare, LLC, a privately owned operator of seven long-term acute care and other healthcare related facilities.
“When we buy an asset, the number one metric we look at is the strength of the healthcare delivery system,” says Danny Prosky, president and COO of Grubb & Ellis Healthcare REIT II. “We think any upside potential is based heavily on the operator, and Solara is a terrific operator. They’re doing very well at this location, and they should continue to do well.”
That means Grubb & Ellis Healthcare REIT II will have an opportunity increase rent when the lease comes up for renewal, Prosky tells GlobeSt.
Muskogee Long-Term Acute Care Hospital is an extended-stay specialty hospital for chronically ill and rehabilitation patients whose average length of stay is 25 days or more. The next closest long-term acute care hospital is approximately 40 miles away in neighboring Tulsa.
Situated on roughly 3.7 acres, the facility is located in the midst of a thriving medical community. The 329-bed Muskogee Regional Medical Center is within one-half mile, the 140-bed Jack C. Montgomery Veterans Affairs Medical Center is within 1.25 miles and Muskogee Community Hospital, a newly-built, 45-bed community hospital, is within approximately five miles.
The four-year-old facility’s close proximity to three significant medical centers enables it to receive a steady source of patients in need of long-term care, Prosky notes. The hospital has an option to expand by 10 beds if and when demand increases.
Prosky says Grubb & Ellis Healthcare REIT II chooses its acquisitions in an effort to diversify the payor mix – a term to describe the source from which healthcare facilities generate their income. Muskogee Long-Term Acute Care Hospital, for example, generates income primarily from private pay insurance and Medicare.
Muskogee Long-Term Acute Care Hospital is Grubb & Ellis Healthcare REIT II’s first acquisition in Oklahoma, and Prosky says he “would not be surprised” if the REIT makes additional buys in the state. “We think Texas and Oklahoma are great markets for healthcare assets,” he concludes.
Philip Camp and Jay Miele of Shattuck Hammond Partners brokered the sale of Muskogee Long-Term Acute Care Hospital.
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