Health Care Property, GE Venture Makes $576M Buys
By VITA REED
It didn’t take too long for the partnership between Health Care Property Investors Inc. and General Electric Co. to get busy.
Health Care Property, a Newport Beach-based real estate investment trust, and partner GE Commercial Finance paid $460 million to buy 100 medical office buildings from Nashville, Tenn.-based MedCap Properties LLC earlier this month.
The partnership’s buy is part of a bigger $576 million acquisition of MedCap assets involving Health Care Property.
Health Care Property is set to be the managing partner of the properties bought with GE. It will take a one-third interest, or $153 million, in the buildings. It also will earn fees for managing the properties.
The investment comes months after Health Care Property inked a $600 million partnership,HCP Medical Office Portfolio LLC,with the GE unit to buy medical office buildings in the U.S.
“This transaction showcases the combined firepower of our joint venture with General Electric,” said Jay Flaherty (photo), Health Care Property’s chief executive, during a conference call. Flaherty declined to talk with the Business Journal about the deal, citing financial disclosure laws.
In addition to the office buys with GE, Health Care Property bought five MedCap buildings under construction for $67 million. It also paid $49 million to acquire another eight buildings with senior MedCap executives.
MedCap and its 23 workers will become part of Health Care Property.
The entire deal includes 6 million square feet of medical office space. The buildings are on hospital campuses in 16 states, including Nevada, Colorado, Texas and Tennessee. All but 12 are based at HCA Inc. hospitals.
HCA is a for-profit hospital operator formerly known as Columbia/HCA Healthcare Corp. The deal, Flaherty said in the conference call, gives Health Care Property “significant critical mass” in Nashville.
“The quality of the portfolio could not be better,” said Charles Elcan, MedCap’s chief executive, during the call. “We’re on the leading hospital campuses in the leading markets on the Sunbelt.” Elcan is expected to join Health Care Property.
MedCap was formed in 2000 to buy and manage HCA and other hospital systems’ medical offices.
In a release, Health Care Property said its venture with GE plans to pursue more medical building buys.
The five buildings under construction that Health Care Property bought are set for a 2004 completion and will be acquired by the GE partnership when they are done.
Prior to the deal, Health Care Property counted 448 healthcare facilities in 44 states in its portfolio, including 175 long-term care homes, 126 retirement and assisted living centers, 85 medical office buildings and 31 hospitals.
