MedSquare Health, a $40 million, 116,000-square-foot, three-story Class A medical office building project is being developed by joint-owners AJP Ventures and Mas Group in Coral Gables. An official groundbreaking ceremony will be held at the site on March 6 at 10 a.m.

Cushman & Wakefield Managing Director Gordon Messinger will lead leasing for the property, marketing the space to a variety of tenants in the medical field. Asking rents will begin in the low $40s per square foot net.

MedSquare Health will be situated on 4.5 acres at the corner of SW 87th Ave. and SW 94th St., within the Baptist Hospital medical submarket, which is one of South Florida’s primary healthcare corridors. The project will be the first off-campus, Class A medical office building developed in the submarket in over 20 years. The site is also within walking distance to Baptist Hospital, which is South Florida-based Baptist Health’s largest facility and one of the largest hospitals in the nation.

“With its state-of-the-art design and central location, MedSquare Health will be South Florida’s premier medical office building, appealing to leading national, regional and local health care providers,” said Messinger.

The design of the LEED-certified building will be led by Modis Architects with careful attention to the quality of tenant and patient experience, from the work environment to outdoor gathering spaces, with an emphasis on maximizing natural light throughout with floor-to-ceiling glass windows. Dual entry will provide access from the adjoined, two-story parking garage as well as the prominent entrance on Galloway Road. Other building amenities include valet parking, a 7 per 1,000-square-foot parking ratio, an on-site café and shared conference room space.

“As the aging American population lives longer, it will continue to drive demand for healthcare real estate,” said Alberto J. Pérez, Founder and President of AJP Ventures. “MedSquare Health will fill a geographic gap for health professionals looking to better serve their patients. That includes aiding healthcare providers in all types of practice who are looking to open, relocate or expand in South Florida.”

The Sarasota Memorial Health Care System has closed on the purchase of the former Sarasota Herald-Tribune building on Main Street where it plans to relocate more than 300 support-services personnel.

The hospital’s $17.3 million project includes renovating the three-story, 72,408-square-foot building on 3.8 acres at 1741 Main St. and constructing a one-story parking structure.

Moving the employees will free space for growth on the hospital’s main campus and improve “interdepartmental efficiencies” among support service departments scattered in different buildings, according to hospital officials.

The hospital paid $10.68 million for the building, spokeswoman Kim Savage said Wednesday. The proposal approved in October included $2.26 million to build the parking platform on top of the existing parking lot to add 90 spaces to the current 240 ground-level parking spots. The hospital board on Tuesday approved entering into a contract with A.D. Morgan Corp. of Bradenton to design and build it. Construction is estimated to take 10 weeks.

“We hope to move employees into the building this summer, but our plans depend on the amount of time it takes to obtain necessary permits and build the parking platform,” Savage said.

Once that construction and the building renovation is completed, employees will be moved over four to six weeks, she said. They will primarily work daytime hours Monday through Friday.

“Purchasing the former Herald-Tribune building is a good move for the hospital and the community,” hospital board member Tramm Hudson said. “It will allow us to expand clinical areas to better serve our growing community and relocate about 300 non-clinical staff members who now work in multiple sites to one downtown location.

“We believe centralizing those team members will enable greater collaboration and efficiencies as well as provide additional parking on our main campus for our patients and visitors,” Hudson said.

Local developer Wayne Ruben signed a contract in June to buy the building, most recently listed for $13.95 million, with unspecified plans to redevelop the property. Officials say he approached the hospital last summer about buying the property. Sarasota Memorial had been looking into constructing a new support services facility at its Clark Road campus.

Built in 2006, the building was first listed for sale at $18.1 million when it was fully leased to the Herald-Tribune and IberiaBank. The Herald-Tribune moved to the SunTrust building next door in February 2017 and the building has been vacant since SNN News Now left last month.

It had been owned by an affiliate of Halifax Media Holdings of Little Rock, Arkansas, which sold the newspaper to New Media Investment Group and Gatehouse Media in early 2015. The New York Times Co., a previous owner of the newspaper under which the building was constructed for about $18 million, sold the property for $17.4 million in 2012. It was designed by the Miami firm Arquitectonica with almost 2,000 panes of glass.

“It’s a terrific addition for that end of Main Street,”′ said Ian Black, whose commercial real estate firm’s Steve Horn represented the seller along with JLL’s Brent Miller.

The Sarasota Memorial Health Care System, an 839-bed regional medical center, is among the largest public health systems in Florida. It has more than 5,000 staff and 900 physicians, primarily in its main campus at 1700 S. Tamiami Trail.

Its growth has created space challenges. For example, the perioperative suite and cardiology department at Sarasota Memorial Hospital are hampered by their current space and lack of room to expand, hospital staff said in its recommendation to buy the building in October.

Under the plan, Sarasota Memorial plans to consolidate administrative functions that now are at four locations. Supply-chain management, corporate compliance, the First Physicians Group central business office and clinical business systems would be moved from the main campus.

The “revenue cycle” operation, which includes patient financial services and registration, will move from Hillview Street. The corporate finance department will relocate from Bee Ridge Road, and physician IT services will come from the Doctors Gardens building south of the hospital across Arlington Street.

Source: Herald-Tribune

Boca Raton Regional Hospital has launched a campaign to raise $250 million for expanding, including the construction of a patient tower on its campus.

The announcement came as the nonprofit hospital prepares for a merger with Miami-based Baptist Health South Florida. That affiliate is expected to be finalized in summer 2019. However, BRRH will maintain its identity.

Its fundraising campaign has showcased how the Boca Raton hospital has one of the deepest donor networks in South Florida. It has already raised $115 million, with donations coming from board members Christine E. Lynn, Stanley and Marilyn Barry, Richard and Barbara Schmidt, Elaine J. Wold, and Louis B. and Anne W. Green.

“We stand at the threshold of an extraordinary future for Boca Raton Regional Hospital, one borne of a powerful and visionary long-term plan,” said BRRH President and CEO Jerry Fedele, who will retire after the Baptist Health deal is consummated. “As always, our supporters of the Hospital have demonstrated their spirit, commitment, and unflagging devotion by helping ensure these plans become reality. We all owe them a debt of gratitude for the sophisticated level of healthcare we will all enjoy as we move forward with this transformative initiative.”

The hospital hopes to expand its campus with a seven-story patient tower. This 180,000-square-foot building would include surgical suites, a patient lobby, and three floors set aside for future growth. The 400 rooms in the current hospital building would be converted to all private rooms with a major renovation, plus a 20-bed observation unit would be added.

BRRH also plans to build a 972-space parking garage.

“We’ve all come together in the spirit of Gloria Drummond, whose pioneering spirit helped build this hospital, to help take us to the next level as a healthcare provider,” said Lynn, chairman of BRRH. “We hope and expect those who care deeply about sophisticated world-class healthcare will embrace this effort and help us bridge the gap between the $115 million we’ve raised to date and the $250 million we need to move forward. Our community has always been there for the hospital, as demonstrably as the hospital has been there for the community.”

Source: SFBJ

It is a $250 million project that brings Doral its first hospital.

Nestled right up next to the Palmetto Expressway and 25th Street, the Jackson West Medical Center is rising fast.

That’s not surprising considering that up 300 workers could be on the site at one time.

With an expected finish date of May 2020, the 100 bed hospital may look out of place in the midst of a warehouse industrial area.

“You have over 60,000 people who live here already full time, and approximately 50 to 70,000 people daytime that work here,” said Carlos Migoya, President of Jackson Health System.

Migoya says that the 585,000 residents living in and around the Doral, Sweetwater and Miami Springs area have dealt with increasingly frustrating traffic.

“The fact is Doral has grown tremendously and if you look at the five year plan, you will have more than 100,000 people living here,” said Migoya.

Other hospital organizations went to court to try and halt the project, saying that Doral was already well served by existing hospitals.

“If you live in Doral, the closest hospital here is seven miles,” said Migoya. “Seven miles in Doral is like dog years because of the traffic.”

The hospital will include an adult and pediatric emergency room, diagnostic center, outpatient clinics, a children’s clinic, a separate office facility and the 100 bed inpatient hospital.

Construction costs are covered by a bond issue and funds from Jackson Health System, which Migoya says is now earning money.

“The demographics here, the growth in Doral, there has been a need for a complete medical center,” said Migoya.

Source: CBS Miami

On Saturday, December 22, 2018, the U.S. Federal Aviation Authority issued its Final Determination for Vertical Medical City, new complex medical project for Downtown Orlando by developer Ponte Health Properties, LLC.

FAA approved the larger portion of VMC ORL, a curved structure, to a maximum height of 444 Feet AGL (Above Ground Level).

Vertical Medical City, to be built in the northern portion of the Downtown Orlando Central Business District, will be moving forward with pre-construction testing during the early weeks of the first quarter of 2019 and is currently in the Master Planning Phase.

Additionally in the early Planning Phases is Vertical Medical City Chicago, as well as projected strategic international locations including London and Osaka, per the developer’s corporate public records.

Officials with Healthcare Network of Southwest Florida have been determined for seven years to bring a new medical complex to fruition in the heart of an area where residents face hardships acquiring medical care.

Shovels are hitting the ground Tuesday to begin construction on the Nichols Community Health Center near Green and Collier boulevards in East Naples on the edge of Golden Gate.

Supporters of the nonprofit Healthcare Network and community leaders will celebrate the start of the $15 million complex with three floors that will offer a full array of medical, mental health, dental health and support services like a drive-thru pharmacy.

Healthcare Network has raised a little more than $7 million and hopes to raise the rest during the 15-month construction, said Mike Ellis, president and chief executive officer of the nonprofit.

Healthcare Network was founded in 1977 in Immokalee and has 22 locations today throughout Collier County, including mobile services.

“We need to get this built for the community,” Ellis said.

The three-story complex will be named after Naples philanthropist Jerry Nichols for his substantial gift for the project. Nichols, a wealth management adviser, moved to Naples from Ohio more than 40 years ago. He has been, along with his late wife, Arlene, a major supporter of education, children and veterans in the community.

Ellis said the building will be “program central” because it has just about every type of outpatient care needed, from women’s care to pediatric services, from dental care to behavioral health.

The opening is targeted for spring 2020. Healthcare Network continues to seek philanthropist support to generate the remaining $7.5 million for the construction.

“We can sustain ourselves, but capital projects are where we need help from the community,” Ellis said.

Stephen Wheeler, vice president of development, said the project is exciting and that the community support has been amazing.

In addition to the gift from Nichols, the size of which is not being disclosed, there’s been support from other individuals and the Moorings Park Foundation Senior Services Center, Wheeler said.

Despite Healthcare Network’s lengthy history in the community, many are unaware of its mission and the opportunities to help, he said.

Many Moorings Park employees are likely future patients of the Nichols center, and the retirement community’s human resources office is helping coordinate to make that happen, he said.

The Nichols center’s patient base is 50,000 adults and 12,000 children in the surrounding region.

“We see 60 percent of the children in the community,” Wheeler said.

The center will have 65 employees once it is fully operational. Services will be added incrementally over three years, when it is projected to reach full capacity, according to Ellis.

Source: Naples Daily News

HCA Healthcare purchased nearly 100 acres in Estero for $52.5 million at the end of December, property records show.

The Nashville-based health care system bought the land for a planned hospital in Estero that state regulators approved last year, said Debra McKell, a spokeswoman for HCA West Florida, a division of HCA.

The land is bordered by U.S. 41 to the west, Williams Road to the south and Via Coconut Point to the east. Hertz Global Headquarters sits directly south of the property on Williams Road.

Property records show Fawcett Memorial Hospital, based in Port Charlotte, purchased the 100-acre property Dec. 20 from Estero North Point LTD. Fawcett Memorial Hospital is one of 15 hospitals that belong to HCA West Florida.

A deed for the purchase lists the hospital’s address as One Park Plaza in Nashville, which is the HCA headquarters. McKell confirmed HCA made the purchase. McKell said the land was acquired for the planned hospital and to “explore other uses as well down the road.”

The property purchased by HCA is currently zoned for commercial uses, Estero Community Development Director Mary Gibbs said. HCA would have to rezone the property to allow any medical uses, Gibbs said.

In June, HCA received approval from state regulators to build an 80-bed hospital in Estero. Lee Health also received approval from the state to build an 82-bed hospital at Lee Health – Coconut Point, its $140 million medical campus now open in Estero south of Coconut Road.

Both health care systems have filed legal challenges to each other’s hospital plans.

The 100-acre property purchased by HCA is less than 5 miles north of Lee Health – Coconut Point in Estero, which opened in early December. Also nearby is Collier County-based NCH Healthcare System’s medical facility that recently opened in Bonita Springs, just south of the city’s border with Estero.

The Lee Health – Coconut Point complex had no impact on HCA’s decision to purchase the property in December, McKell said.

“I don’t think we follow other health systems to determine where we’re putting something,” McKell said.

Lee Health has been working with Estero for more than a dozen years to build a hospital in the community, said Mary Briggs, a spokeswoman for Lee Health.

“We think we have the best location. We’ve already built the complementary outpatient services that serve the hospital,” Briggs said. “We’re just moving forward our plans to build that facility.”

Former Florida governor and now Sen. Rick Scott led what was then known as Columbia/HCA between 1987 and 1997. He left amid a federal investigation into its Medicare billing practices, which ultimately forced the company to pay $1.7 billion in penalties and fines between 2000 and 2002.

HCA formerly operated the now-demolished Southwest Florida Regional Medical Center and what was once known as Gulf Coast Hospital. Lee Health acquired both in 2006 in a $535 million deal.

Estero’s Village Center

The 100-acre property purchased by HCA is within Estero’s village center.

Estero has planned the village center to be a walkable, mixed-use downtown for residents and businesses in the community. Land in Estero’s village center stretches from near Coconut Road to just north of Broadway.

Estero Mayor Jim Boesch said the purchase by HCA is great news for the village.

“We’ve waited long for that 100 acres to come to pass,” he said.

Boesch said development on the property will add to the momentum happening in the village center.

He pointed to construction of the Genova condos at the southeast corner of Corkscrew Road and Via Coconut Point and Estero’s pending purchase of 62 acres along the Estero River at the northeast corner of Corkscrew Road and U.S. 41.

The village is expected to close on the Estero River property Monday, Jan. 14.

“My prediction is U.S. 41 and Corkscrew Road will be the center of town,” Boesch said.

Source: Naples Daily News

Thirty years after moving beyond its Midwest base and founding a Florida outpost, Cleveland Clinic has taken a giant leap here this year with a round of acquisitions and expansions that will take it from 155 beds in Weston to 1,058 beds across five Southeast Florida hospitals and a geographic range eclipsing that of its Ohio home.
In October, Cleveland Clinic Florida inked deals to absorb the non-profit Martin Health, a system with three hospitals in Martin and St. Lucie counties, and the non-profit Indian River Medical Center in Vero Beach in Indian River County.

“Our footprint in Southeast Florida is geographically going to be much bigger than our present footprint in northeast Ohio,” says Cleveland Clinic Florida CEO Dr. Wael Barsoum. Indian River lies 128 miles to the north of its base in Weston in Broward County. In Ohio, Cleveland Clinic’s main campus, plus 11 regional hospitals and 18 fullservice family health centers, all lie in a seven-county region within a 30-mile radius of Cleveland.

The two Treasure Coast hospital deals were Cleveland Clinic’s biggest by far, but the year also has seen it expand in Palm Beach and Broward. It opened a medical office in Wellington in March. In north Broward, in July it opened a 73,000-sq.-ft. family health center. In Weston, its Florida base for 17 years, Cleveland Clinic opened a tower and an expanded emergency department that total 221,000 square feet. In Fort Lauderdale, it opened a concierge medical practice this year and imported as its lead doctor a Cleveland Clinic Ohio internist who had been the personal doctor for doctors there, including Barsoum.
Hospital and health system mergers and acquisitions last year totaled a record 115 nationally, according to Illinois consulting firm Kaufman Hill. Driven by Obama-era health law changes and by a desire for negotiating power with insurers in the face of rising costs and decreasing reimbursements, hospitals have gone after scale. Stand-alone hospitals in particular have faced a squeeze.
Barsoum says Cleveland Clinic has cut $1 billion in costs in the last five years from its $8-billion system. “To stay at the top of the hill, you have to be thinking about what’s coming and to an extent be our own disruptor,” he says.
Investment rating service Moody’s says that while Cleveland Clinic is an international brand with strong cash flow and “exceptional fundraising capabilities,” revenue growth is constrained in northeast Ohio. In part, that’s what’s driving the geographic expansion in Florida and also the opening of a 200-bed hospital in London. (Cleveland Clinic also has sites in Toronto, Abu Dhabi and Las Vegas.)
At Martin Health, Cleveland Clinic has promised to invest $500 million over five years. The two already had teamed up on heart and vascular care. A Cleveland Clinic Florida cardiothoracic surgeon joined Martin Health to perform heart and lung surgeries at Martin Medical Center. At Indian River, Cleveland Clinic promised to invest $250 million over 10 years. Indian River board Chair Dr. Wayne Hockmeyer has said Cleveland Clinic’s reputation will be a “powerful recruiting tool” for top-quality doctors.
In its report, Moody’s mentioned more “potential acquisitions” in Florida. Barsoum says the organization is open to the idea. “We recognize health-care organizations, to be successful, need some level of scale,” he says. “We are regularly approached by health systems and hospitals, and we are open to talking with them. If there is a community or hospital that wants us and they are like-minded and a clinical fit, then we look forward to exploring those options.”
Cleveland’s Expanding Reach
Indian River Medical Center and Martin Health have recently joined Cleveland Clinic Florida.

 

Cleveland Clinic Florida, Weston
Beds: 205
Employees: 3,067
Revenue: $500 million
Staff size: 259 physicians; 2,808 others
Campus: Main campus in Weston with locations in Coral Springs, Fort Lauderdale, Parkland and Palm Beach County

 

Indian River Medical Center, Vero Beach
Beds: 332
Employees: More than 2,000
Revenue: $290 million
Patients: 15,300 admissions
Physicians: 320
Campus: IRMC includes the Welsh Heart Center and Scully Endoscopy Center within the facility; separate buildings on the campus: Scully-Welsh Cancer Center, Health and Wellness Center, Wound Care Center

 

Martin Health
Beds: 521
Employees: 4,500
Revenue: $559.6 million
Patients: 34,418 admissions, 117,112 emergency department visits
Staff size: 504 physicians on medical staff, 150 employed physicians
Campus: Three hospitals (two in Stuart, one in Port St. Lucie)

 

Source: Florida Trend

The U.S. outpatient care center sector has grown robustly in recent years as asking rents for medical office buildings continue to rise and health systems seek to provide a better patient experience at a lower cost, according to a new report from CBRE.

The U.S. average asking rent reached its highest level on record in Q2 2018, rising 1.4 percent year-over-year to $22.90 per sq. ft., due to tight market conditions and the completion of new, high-quality space.

“Rents increased in two-thirds of the markets tracked by CBRE and grew fastest in some of the markets with the lowest vacancy rates, including Nashville, Manhattan, Louisville, Seattle, and Indianapolis,” said Andrea Cross, Americas head of office research, CBRE.

In addition to rising rents, health systems have increasingly turned to lower-cost outpatient centers—which enable them to provide lower-cost services closer to where patients live—due to higher capital costs stemming from mergers and acquisitions and a surge in in employer-sponsored, high-deductible health plans requiring patients to pay larger out-of-pocket amounts.

The total number of outpatient centers grew more than 50 percent to approximately 41,000 from 2005 to 2016. Outpatient center employment has more than doubled since 2003, and grew 3.5 percent year-over-year in October 2018, compared with 2 percent annual growth in overall healthcare employment.

“Healthcare systems are increasingly catering to patients as consumers—rather than simply users—of healthcare services,” said Mark Lamp, executive managing director, Healthcare, CBRE. “They are creating outpatient facilities that provide a more ‘hotel-like’ experience—and at a lower cost than the more expensive hospital services—with technology-enabled check-in, abundant natural light and incorporated outdoor spaces, and patient care concierges trained to support guests with any needs.”

Capital Markets Trends

Trailing 12-month transaction volume decreased to just below $12 billion in Q2 2018 but remained not far off the cyclical high of $14.2 billion.

“Medical office properties have shifted from a specialty asset class to a core asset class,” said Chris Bodnar, vice chairman, Healthcare Capital Markets, CBRE. “Institutional and cross-border investors have ramped up their medical office acquisition activity, with cross-border investors on pace to record their highest annual level of net acquisitions in at least a decade in 2018.”

Development Trends

Medical office development strongly correlates with population growth, with Phoenix, Houston, Dallas/Ft. Worth and Atlanta among the top markets for total completions from Q3 2017 to Q2 2018, along with Minneapolis/St. Paul, a leading healthcare cluster. Houston, Minneapolis/St. Paul, Atlanta, Chicago, the Inland Empire, Kansas City and Boston rank among the top markets for square footage under construction.

After nearly 60 percent growth in medical office completions between 2011 and 2017, under-construction levels have started to slow, with lower levels of new supply in the coming quarters likely.

“Many hospital systems have slowed their development activity to reexamine their operations, including how to adapt their real estate strategies to provide a better patient experience at a lower cost,” Ms. Cross added.

To download a complete copy of the report, please click here.

Welltower Inc. (NYSE: WELL) and CNL Healthcare Properties announced today that they have entered into a definitive agreement under which Welltower will acquire a Class A medical office and outpatient facilities portfolio comprised of 55 buildings from CNL Healthcare Properties for $1.25 billion. The sale is expected to close during the first half of 2019, subject to customary closing conditions, governmental and other third-party consents.

Welltower will be acquiring 55 assets out of the 63 properties (medical office buildings, post-acute care facilities and specialty hospitals) initially marketed by CNL Healthcare Properties through its strategic financial advisors. The 55 properties have a current occupancy of 94 percent and average annual rent increases of 2.4 percent. The properties are strategically located and 92 percent are affiliated with some of the nation’s premier health systems including Novant, Memorial Hermann and Cleveland Clinic. With 3.3 million rentable square feet in major metropolitan markets across 16 states, the acquisition portfolio will have significant overlap and synergies with Welltower’s existing outpatient medical footprint. Welltower’s proprietary data science and analytics platform has identified this Class A portfolio to have above average market potential defined by opportunity metrics such as market prioritization rank, predictive annual gross rent, insurance/payor mix and physician net need score. At the same time, the portfolio is affiliated with strong hospitals and health systems, none of which are “at risk” hospitals based on Welltower’s proprietary hospital risk analysis.

“Through the strategic acquisition of 55 high-quality medical office buildings from CNL Healthcare Properties, we continue to accretively expand our outpatient medical and health system portfolio,” said Shankh Mitra, Welltower’s chief investment officer. “Welltower was able to act quickly and definitively when the opportunity presented itself, leveraging our proprietary data science platform and deep local presence through our real estate services platform to come to an agreement with CNL as a high quality and reputable sponsor. With market potential metrics and low risk factors, along with a healthy initial cash yield, good escalators and low capital expenditure requirements, this investment will provide an excellent total return for our shareholders.”

CNL Healthcare Properties, a public, non-listed real estate investment trust (REIT) focused on seniors housing and healthcare facilities with a highly respected and seasoned management team, is monetizing this medical office portfolio as part of its ongoing process to pursue strategic alternatives to provide liquidity for its shareholders. The company plans to use the proceeds from the sale to repay debt, pay closing costs and other related expenses. The company, with approval from its board of directors, may use proceeds to rebalance corporate borrowings to further bolster its balance sheet as it pursues additional liquidity alternatives. Post-closing, the company expects to make a special distribution to shareholders, also subject to approval of its board of directors.

CNL Healthcare Properties will continue to own and actively manage a sizeable private-pay, seniors housing centric portfolio of 87 communities located in 31 states.

“Since CNL Healthcare Properties made our first investment in early 2012, we have worked swiftly and thoughtfully to construct and nurture a leading national portfolio of seniors housing and healthcare assets,” said Stephen H. Mauldin, president and CEO of CNL Healthcare Properties. “The sale of our Class A medical office assets to Welltower underscores both the high quality of these properties and our focused work to drive investment performance and value for our investors. Welltower’s deep knowledge of the sector, the CNL platform’s positive experience in past dealings with Welltower, along with its reputation of certainty in delivering on commitments will realize significant value for our shareholders in today’s volatile capital market environment. While we are in the early phases of our strategic liquidity process for the fund, we are confident that this transaction is a strong first step to begin returning capital to our shareholders.”

In June 2018, CNL Healthcare Properties engaged the real estate investment banking groups of HFF Securities L.P. and KeyBanc Capital Markets Inc. to act as strategic financial advisors in exploring and executing potential liquidity alternatives.

Over the last 15 years, CNL Financial Group has been especially active in the seniors housing and healthcare sectors. As of Dec. 31, 2018, CNL-sponsored companies have invested in seniors housing and healthcare real estate investments valued at more than $10 billion, collectively.