May 2, 2019
By: Taylor Arluck
Law360 (April 18, 2019, 4:00 PM EDT) — Global Medical REIT completed its $94 million purchase of four inpatient rehabilitation facilities from CNL Healthcare Properties affiliates that are expected to yield about $6.9 million in annual rent, according to a news release on Thursday.
The Bethesda, Maryland-based real estate investment trust, which announced the deal in March, picked up about 207,000 square feet from the rehab facilities, which will be leased to health care providers under long-term triple-net leases that have an average remaining term of a little more than 8 years. Triple-net leases require tenants to pay for property expenses, such as real estate taxes, building insurance and maintenance, on top of the rent.
The property portfolio contains rehab facilities in Las Vegas; Surprise, Arizona; Oklahoma City; and Mishawaka, Indiana, according to an 8-K filing from Global Medical REIT Inc. earlier in the week.
Global Medical REIT CEO Jeffrey Busch said the deal was part of the company’s financial strategy in its net-lease medical properties business.
“We believe the rent generated by this acquisition, in combination with the underlying cash flows generated through our existing real estate portfolio, are essential to creating a sustainable dividend and long-term stockholder value,” Busch said in a statement Thursday.
In a separate move Monday, Global Medical REIT also tapped half of a $150 million line of credit for cash on hand, according to the 8-K filing.
Global Medical REIT’s real estate portfolio contains 84 buildings that are mainly leased on a triple-net basis and contains more than 2.1 million net leasable square feet, according to the news release. The REIT’s assets are mostly in smaller markets across the U.S.
In June 2016, Global Medical REIT’s initial public offering was priced at about $130 million as the company listed more than 13 million shares on the New York Stock Exchange. At the time of the IPO, Global Medical REIT had 12 facilities in Tennessee, Nebraska, Texas, Florida, Pennsylvania, Michigan and North Carolina.
CNL Healthcare Properties Inc. is a privately owned real estate investment trust, with 58 percent of its portfolio in senior housing and 31 percent in medical offices, according to a recent fact card on the company’s website.
Global Medical REIT was represented by Cox Castle & Nicholson LLP in the deal.
CNL Healthcare Properties was represented by Lowndes Drosdick Doster Kantor & Reed PA in the deal.