REGION: Phoenix Metro Area
SERVICES PROVIDED: Medical Office Portfolio Disposition
SIZE: 4 Buildings – 406,894 SF
The Challenge
Integrated Medical Services (IMS) is a physician-led organization that was started in 2006 and has grown to approximately 145 providers with 65 locations throughout the Phoenix metropolitan area. From 2004 – 2008 IMS physicians and other investors built four Class A medical office buildings collectively comprising 406,894 RSF with strategic locations on/near leading hospital campuses in Maricopa County. The four separate real estate ownership entities leased the majority of the square footage to IMS and its affiliates at above market rental rates with short-term leases. Newmark Grubb Knight Frank (“NGKF”) was hired to navigate four separate ownership groups and structure the offering as a portfolio sale to maximize value.
Action
NGKF underwrote the Portfolio and confidentially marketed the offering to prequalified investment groups that are active in the healthcare real estate investment community. NGKF successfully ran a competitive marketing process and secured several qualified offers from national healthcare REITs and private investment groups. NGKF met with each group of physician owners onsite and presented offers and the qualifications of each potential buyer. During the marketing and due diligence processes, NGKF worked with the owners and successfully secured 10-year lease terms at NNN market rents from the IMS tenants.
Achievement
As a result of the competitive marketing process and lease term extensions, NGKF successfully sold the portfolio to a healthcare REIT for $141M, setting a record as the highest price paid at $347 PSF for a multi-tenant medical office building portfolio located in metro Phoenix. Not only did NGKF exceed the owners’ expectations of the portfolio’s value by over $21M, the lease term extensions at market collectively decreased the IMS tenants’ annual rent obligations by over $1.5M.
“Setting a record as the highest price paid at $347 PSF for a multi- tenant medical office building portfolio located in metro Phoenix”
Highlights
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Navigated four separate ownership groups and structured the offering as a portfolio sale to maximize value
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Successfully sold the portfolio to a healthcare REIT for $141M, setting a record as the highest price paid at $347 PSF for a multi-tenant medical office building portfolio located in metro Phoenix.
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Exceeded owners’ expectations of the portfolio’s value by over $21M,
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Decreased the IMS tenants’ annual rent obligations by over $1.5M.
Featured Podcast
Trisha speaks with the Executive VP and CIO at Physicians Realty Trust, Dan Klein who was the buyer.