American Realty Capital Healthcare Trust reported Thursday that it anticipates acquiring a free-standing, fee simple rehabilitation hospital in Bedford, TX and a free-standing fee simple ambulatory surgery center in Texarkana, TX for a total of $36.8 million.
Bedford, TX Rehab Hospital
The rehabilitation hospital in Bedford, TX is leased to Reliant Healthcare Partners, LLC, an operating joint venture between Nautic Partners, LLC and a physician group. Nautic and the physician group own 74% and 26% of Reliant Healthcare Partners, respectively.
The property contains 65,141 square feet of gross leasable area and 60 beds. The property is a clinical inpatient facility that provides nurse and therapy staff, ancillary services and supplies to treat patients who require intensive rehabilitative care generally after receiving treatment or service at an acute care hospital. The property is approximately one mile from Harris Methodist HEB Hospital, five miles from North Hills Hospital, and seven miles from Baylor Regional Medical Center at Grapevine.
The purchase price of the property is $32.3 million at a capitalization rate of 10.20%. American Realty Capital Healthcare Trust intends to fund sixty percent of the purchase price. The remainder will come from a first mortgage loan from a lender yet to be identified. Bedford Hospital Partners, L.P, which developed the property, will provide $3.5 million in personal guarantees for up to seven years from the lease commencement date which amount is reduced in multiple increments if Reliant Healthcare Partners achieves certain pre-prescribed performance metrics.
Reliant Healthcare Partners fully leases the asset via a lease with a twenty year term that commenced upon completion of the construction of the hospital and expires on October 23, 2030. The trade is expected to occur in September 2011. The lease contains 2.0% fixed annual rental escalations during the primary term and two renewal options of ten years each at market rates. The lease is triple net.
The total annual rent for the initial lease term will be approximately $2.7 million increasing on October 24, 2011.
Nautic, a private equity firm with over $2.5 billion of capital under management, purchased Reliant Hospital Partners in March 2011 and subsequently formed the joint venture with the physicians group. Nautic currently has four active investments in healthcare-related companies and has exited from eleven various healthcare related companies throughout its history. Nautic targets equity investments of $25 to $75 million.
Texarkana Surgery Center
American Realty Capital Healthcare Trust anticipates acquiring one free-standing fee simple ambulatory surgery center in Texarkana, Texas.
The tenant of the property will be Texarkana Surgery Center, L.P., an operating joint venture between Symbion, Inc. ("Symbion") and a 23-member physician group. The physician group and Symbion own 42% and 58% of Texarkana Surgery, respectively.
The property contains 17,500 rentable square feet which includes four operating rooms, a pre-op holding area, a recovery room, an x-ray room and a minor procedure room. The property was completed as a build-to-suit facility for the physicians in 1995 that later formed Texarkana Surgery with Symbion in 2000.
The purchase price of the property is $4.5 million at a capitalization rate of 9.42 percent. American Realty Capital Healthcare Trust intends to fund one hundred percent of the purchase price.
The property is 100% leased to Texarkana Surgery via a 10 year lease that expires on April 30, 2021. American Realty Capital Healthcare Trust estimate that it will close on the acquisition in June 2011. The lease contains 2.0% fixed annual rental escalations during the primary term.
This lease is double net. The landlord, American Realty Capital Healthcare Trust, is responsible for maintaining the roof and structure of the building and Texarkana Surgery is required to pay substantially all other operating expenses, in addition to base rent. The total annual rent for the initial lease term will be approximately $393,000.
Approximately 50 doctors practice at the Texarkana Surgery facility within various specialties with no procedure type representing more than 20% of the revenues. Primary services include ophthalmology and ear, nose and throat.
Symbion, located in Nashville, Tennessee, is an operator of short-stay surgical facilities. The company was founded in 1999 to acquire, develop and operate short-stay surgical facilities in partnership with physicians, hospitals and health systems.
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