HOUSTON-With an investment of $38.1 million, Healthcare Trust of America Inc. has acquired an 84% interest in a partnership that owns a 176,000-square-foot medical office building.
The non-traded REIT bought the interest from Plan B-MOB LP, a limited partnership created by local developer Stonehenge Real Estate Investment Co. It also modified the partnership agreement so HTA has the right to control partnership decisions and to allow HTA first right of refusal to purchase remaining limited partner interests.
Located at 7900 Fannin St., the medical office building is adjacent to The Woman's Hospital of Texas, an HCA-affiliated hospital within the Texas Medical Center. The Texas Medical Center is the largest medical center in the world with 49 medicine-related institutions, 13 renowned hospitals, two specialty institutions, two medical schools, four nursing schools, schools of dentistry and other health related schools and practices that receive approximately six million patient visits per year.
Built in 2005, the four-story building is 100% leased to 23 tenants, with a total weighted average remaining lease term of over 11 years. The largest tenant, Obstetrical and Gynecological Associates, occupies approximately 85,000 square feet (48%) of the property with 16 years remaining on its lease. The balance of the property is leased to complementary medical practices which primarily focus on women's and children's health.
Mark Engstrom, executive vice president of acquisitions for HTA, tells GlobeSt. the REIT found out about the opportunity through industry relationships. HTA and the partnership had been talking on-and-off for more than 12 months before negotiating the acquisition terms 90 days ago.
The transaction provided the 22 original physician investors with the right to remain in the partnership, receive limited partnership units in HTA's operating partnership and/or receive cash. Ten original investors elected to remain in the partnership post-closing as limited partners with an aggregate limited partnership interest of approximately 16%.
This is the first acquisition that HTA made that involved so many physician investors, Engstrom says. “We had multiple investors with different needs,” he notes. “I think our ability to be creative and flexible is what allowed us to get this deal done.”
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