HFF Advises CNL on $1.25B Portfolio Sale

Midtown Medical Plaza. Image courtesy of Welltower

HFF and its affiliate HFF Securities (HFFS) have advised CNL Healthcare Properties Inc. on its $1.25 billion sale of a 55-building medical office portfolio to Welltower Inc. Senior Managing Directors Steve Hentschel and Ted Flagg led the HFFS team representing CNL in the sale, which has recently completed after being announced in January. They were joined by members of HFF’s national medical office capital markets team, including Managing Directors Evan Kovac and Ben Appel, as well as Directors Andrew Milne, Zach Drozda and Anthony Frogameni.

The portfolio totals 3.3 million square feet, spread across 16 states, including Florida, Oregon, California, Georgia and North Caroline. The facilities are located within major metropolitan markets and are affiliated with health systems such as Novant, Memorial Hermann and Cleveland Clinic. The portfolio includes the 218,500-square-foot Midtown Medical Plaza in Charlotte, N.C., the 104,774-square-foot Bend Memorial Clinic in Bend, Ore., the 55,300-square-foot Spivey Station Physicians Center in Jonesboro, Ga., and the 90,600-square-foot MedArts in the Springs I & II in Coral Springs, Fla.  

CNL Healthcare Properties, a non-traded REIT, initially put 63 properties on the market. The 55 properties that were ultimately sold had an occupancy rate of 94 percent and average annual rent increases of 2.4 percent as of January.

Taking stock of a medical mega-deal

MedArts in the Springs I & II. Image courtesy of Yardi Matrix

The deal marked the second-largest medical office portfolio sale ever by total dollar volume, the brokerage noted in a prepared statement. Net sales proceeds from the transaction after closing costs, repayment of debt, prorations and other adjustments was about $550 million, according to a statement by CNL.

Following the closing, CNL’s portfolio now totals 83 discreet assets, including 71 senior housing communities, 11 post-acute and acute care facilities and one vacant land parcel. CNL Healthcare Properties is sponsored by private investment management firm CNL Financial Group.

Welltower, a NYSE-listed REIT that invests in senior housing and healthcare properties across North America and the UK, said in a recent statement that it has already made progress on enhancing the value of the medical office assets, including extending ground leases.

The closing of the deal comes after HFFS advised CNL on the sale of four inpatient rehabilitation facilities for a total of $94 million in April. Global Medical REIT acquired the properties, which are located in Las Vegas, Oklahoma City, Surprise, Ariz., and Mishawaka, Ind.

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