Wednesday, January 27, 2016

Sands Closes $7.5M Lehigh Valley MOB Transactions

by Steve Lubetkin,
Sands Investment Group's Bryant Hoover says the California firm arranged the $7.5 million sale and leaseback of two doctor-owned medical office buildings in the Lehigh Valley cities of Whitehall and Bethlehem, PA.

Hoover, of Sands' Santa Monica office, represented the sellers, groups of doctor/owners, in both transactions. The buyer for both properties was an East Coast institutional investment firm, but neither it nor the sellers were identified.

The first sale involved the $4.415 million sale and leaseback of a 22,742-square-foot, three-tenant medical office property located at 2014 County Line Road in Bethlehem. The property, in an optimal medical area surrounded by a number of hospitals and clinics, is situated within a mile of the Lehigh Valley Hospital. Tenants include Fresenius, RMS, a DaVita subsidiary, and Valley Kidney Specialists. SIG sold the building, developed in 1972, at $194 per foot at a 6.8 cap rate. “This was an older building owned by a group of doctors, and several of the doctors wanted to retire,” Bryant Hoover of Sands Investment Group’s Santa Monica office tells exclusively. “We needed to educate the doctors in terms of a sale-leaseback, and on cap rates, and let them know that the other doctors can retire and we can get you the highest dollar amount for this property, especially at the peak of the market, where it’s more a cap rate play than a per-square-foot.”

The second transaction was the $3.125 million sale and leaseback of a 10,170-square-foot single tenant medical office building anchored by Fresenius Medical Care. The property is located at 1320 Mickley Road in Whitehall. This is an extremely strong location near six major area hospitals. SIG achieved a cap rate of 6.7 on this transaction. The owners of the building also serve as medical directors for Fresenius, says Hoover.  “By extending the lease, we’re also able to get a high dollar amount on the property because of the income stream,” he says. “Both of these have new ten-year leases on them when we’re done.”

“REITs currently own less than 20 percent of the entire US medical office market,” says Hoover. “By structuring a sale/leaseback with the doctors and owners of the MOB, these assets become more desirable for future investors.”

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