ATLANTA-Healthcare Trust of America, a self-managed, non-traded REIT, acquired a 35,200-square-foot medical office building in Stockbridge GA, a suburb of Atlanta, for just over $8 million. The acquisition, the sixth this month, is part of a $260.6-million buying spree that the REIT has been on since January of this year, buying up properties in Indiana, Texas and Charleston, South Carolina just in the month of July.
The most active buyer of medical office buildings in the country in 2009, says Mark D. Engstrom, executive vice president for acquisitions at the Scottsdale, AZ-based company, HTA has acquired 8.6 million square feet since its formation in 2006. The REIT started buying assets in early 2007, says Engstrom.
Overlook at Eagle’s Landing, the latest acquisition, is a 100%-occupied medical office building that is located in the southern suburbs of Atlanta in Henry County, one of the fastest growing counties in the US in 2009. The six-year-old building is less than a half mile from the Henry Medical Center, a 215-bed not-for-profit community hospital with more than 400 physicians on staff which has served Henry County since 1979. The facility recently completed a $60 million expansion.
Engstrom is bullish on the future for medical office buildings, which is why his company keeps buying them, he says. “We believe the healthcare bill will be positive for our company, because hospitals will continue to move services from the hospital into an environment which is on campus, but which has a lower occupancy cost,” he says. “In our whole medical office portfolio, 73% of the buildings are on campus, or across the street from a hospital,” says Engstrom.
“Patients will now be insured, so they won’t have to go to the emergency room to get care,” says Engstrom. The buildings they will go to are more likely to be owned by the Healthcare Trust of America, he says.
“There will be more focus on balance sheets and liquidity,” says Engstrom. “You are going to insure 30 to 40 million more patients, but the average revenue per patient will probably be reduced, which means that doctors will get less money in some cases,” he says. The other thing that is changing, says Engstrom, is that the population is aging and as more people get older, they will increasingly be going to doctors’ offices for chronic illnesses.
HTA, which is in 21 states today, has a large portfolio in the Southeast. “We like business-friendly states,” says Engstrom. In South Carolina, Georgia and Florida, HTA owns 2.2 million square feet.
“We will continue to look for medical office buildings nationally and in Florida, although I won’t say where,” says Engstorm. “In Georgia, we continue to like the metro Atlanta area, because there is population growth there and healthcare is population-driven,” he says.
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