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Several Greensboro medical facilities leased by Cone Health have been bought for a combined $72.73 million by a Florida-based real estate investment trust.
The largest of the sold properties was 1126-1132 N. Church St., bought for $45.18 million. It is known as Church Street Medical 1 and contains 68,672 square feet.
The other properties are: 2011 N. Church St., bought for $9.49 million; 912 Third St., bought for $9.06 million; and 510 N. Elam Ave., bought for $9.02 million.
“Cone Health leases all or a portion of these buildings,” the system said. “Cone was not a party to the transaction.”
The buyers are affiliates of AW Property Co. of North Palm Beach, Fla. The sellers are affiliates of HealthCare Realty of Nashville, Tenn.
The real estate investment trust focuses on “well-located assets in the Southeast that offer stability, in-place income and growth potential.” It owns more than 85 medical facility properties.
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“We seek situations where assets can be acquired at below-market prices and where we can enhance value through operational improvement and strategic repositioning.”
AW Property’s North Carolina portfolio also includes a Novant Health Inc. campus in Wilmington containing six buildings comprising 56,391 square feet across from New Hanover Regional Medical Center.
Out-of-state buyers
The purchases were only the latest involving the sale of Triad medical properties to out-of-state groups.
In May, Novant Health commenced a real estate sale and leaseback initiative likely to be worth hundreds of millions of dollars to the nonprofit medical system.
The first phase includes its Winston-Salem corporate headquarters at 2085 Frontis Plaza Blvd. — which contains 78,437 square feet on 9.94 acres — and a combined 21 properties in its Triad, Charlotte and Wilmington markets.
Novant said the sales were completed May 17 and involved Remedy Medical Properties and Kayne Anderson Real Estate, both based in Chicago, as acquirers.
According to filings with the Forsyth County Register of Deeds office, Novant received $13 million for the 2085 Frontis Plaza property and $17.85 million for the 190 Kimel Park Drive site in Winston-Salem that includes 57,530 square feet on 5.96 acres.
It is likely Novant could gain hundreds of millions of dollars from the first phase alone given that in October 2019, affiliates of Chicago medical real-estate investment trust MB Real Estate expanded its ownership presence in Winston-Salem by spending a combined $83.86 million on seven properties that Novant leases.
Novant said the 21 properties are “part of a larger, multi-phased sale/leaseback transactions that will be completed this summer.”
The others are: 6431 Old Plank Road in High Point (6,498 square feet, 1.32 acres); 1710 Kernersville Medical Parkway and 1730 Kernersville Medical Parkway that are specialty office outparcels to Kernersville Medical Center; and 167 Moore Road in King (30,836 square feet, 9.33 acres).
Novant said the decision to choose a sale/leaseback real-estate initiative “represents Novant Health’s dedication to continually seek innovative opportunities and expert connections that enable the health system to focus on its core priorities of caring for patients and bringing remarkable experiences to life to create a healthier future.”
In December 2022, a Novant-leased building was purchased for $21.5 million in one of the largest single medical real-estate sales in recent Forsyth County history.
The 38,904-square-foot property at 3155 Maplewood Ave. has Novant Imaging providers as the tenants.
The buyer is Catalyst Healthcare Real Estate of Pensacola, Fla., a nationwide full-service health-care real estate investment firm.
The largest combined transaction occurred in October 2019 when high-profile Chicago medical real-estate investment trust MB Real Estate spent $83.86 million to buy seven Forsyth County properties that Novant leases.
The most expensive purchase was an MB affiliate that paid $33.4 million for the Winston-Salem Health Care facility at 250 Charlois Blvd.
Altogether during 2019, the MB Real Estate affiliates spent a combined $156.75 million on 15 Triad healthcare properties.
John H. Boyd, founder and principal with global site-selection firm The Boyd Co. of Boca Raton, Fla., said medical facility real estate in the Triad has become as attractive as their commercial and industrial counterparts.
“Strong economic, demographic and technological drivers are all in place now, providing strong tailwinds to the growing health-care REIT activity being seen now in the Triad,” Boyd said.
“Especially attractive real-estate investments are outpatient medical office buildings, due to the growing demand for a more patient-centered health-care delivery.”
Boyd said the “graying of the U.S. population materially increases the health-care demand from seniors.”
“Other trends being factored: new health-care building construction around the country is not nearly keeping pace with demand; and the fact that since Affordable Care Act went into effect, millions of Americans that did not have access to health insurance now do and are showing up at doctors’ offices in record numbers,” he said.
“With more covered patients and more dependable foot traffic, there are more payments coming into the system and less risk of default on rents and landlord debt,” Boyd said.
rcraver@wsjournal.com
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