A Rochester real estate investment trust has closed on its largest deal: a $46.5 million acquisition of six medical office buildings in Arizona, Illinois and Wisconsin.
Broadstone Real Estate LLC this week said its Broadstone Net Lease Inc. has acquired the properties from Irgens, a commercial real estate developer based in Milwaukee.
The buildings in Wisconsin, totaling some 124,000 square feet, are:
- the Sunnyslope Health Center and the Medical College of Wisconsin's Springdale Health Center in Brookfield;
- the Westbrook Health Center in Waukesha; and
- the Greenfield Highlands Health Center in Greenfield.
Also acquired are the Edward Healthcare Center in Plainfield, Ill., and the Banner Health Center in Goodyear, Ariz.
The properties were all leased to market-dominant hospital systems with attractive credit ratings, said Stan Johnson Co. of Tulsa, Okla., which represented Irgens in the sale.
"These were all single-tenant facilities which are consistent with the hub-and-spoke delivery model being employed by top health care systems across the country," said Jeffrey Matulis, director for investment sales at Stan Johnson, in a statement. "This, in conjunction with the strong credit and lease economics, proved to be very attractive to the investment community."
Chris Czarnecki, Broadstone Real Estate's chief financial officer, said the deal includes a triple net lease for tenants. That means the tenant is responsible for the net amount of three types of cost: real estate taxes on the leased asset, building insurance and common area maintenance.
The setup allows the company to manage its properties from its local base, with periodic trips to the sites. The goal is to hold the properties on a long-term basis, with regular evaluations of the firm's portfolio, he said.
Broadstone Net Lease is a private REIT that invests in freestanding, single-tenant and absolute net-leased properties throughout the United States. The company has 176 properties in 27 states. It is part of Broadstone Real Estate, which is led by Chairman and CEO Amy Tait.
The most recent deal is its largest from a financial perspective, Czarnecki said, and other transactions typically have been in the $5 million to $25 million range.
Broadstone Net Lease invests evenly in three segments: medical office buildings, industrial facilities and, among retail properties, restaurants and convenience store gas stations. Its largest concentrations of property are in North Carolina, Florida and Texas.
The diversification has helped the business grow, he said.
In 2012, Broadstone Net Lease's acquisitions included 21 net-leased properties totaling $38.8 million. Among the properties were two industrial buildings in Ohio; six Wendy's restaurants throughout West Virginia, Ohio and Pennsylvania; medical office buildings in Greensboro, N.C., and Lewisville, Texas; and 11 Kentucky Fried Chicken restaurants throughout Chicago.
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