Santa Ana-based Triple Net Properties LLC, known for buying office buildings, is looking to healthcare for its next venture.
Triple Net’s NNN Healthcare/Office REIT Inc., a new real estate investment trust, last month said it made a couple of deals for medical buildings in a pair of Indianapolis suburbs.
Terms of the deals weren’t disclosed.
NNN Healthcare bought Southpointe Office Park and Epler Parke I in Southport, just outside Indianapolis.
Southpointe is made up of seven single-story medical office buildings with some 97,000 square feet of space. It’s near Community Hospital South, part of Community Health Network, a large hospital operator in Indianapolis.
Southpointe is 96% full with a mix of medical and office tenants.
NNN Healthcare, which raised more than $2.6 million through a share offering to real estate investors last year, also picked up the Crawfordsville Medical Office Park and Athens Surgery Center in Crawfordsville, about 50 miles northwest of Indianapolis.
Crawfordsville Medical takes up 29,000 square feet on nearly 3 acres of land, and sits on the St. Clare Medical Center campus.
The Sisters of St. Francis Health Services of Perpetual Adoration Inc., a Catholic healthcare system, is leasing and occupying Crawfordsville Medical, NNN Healthcare said.
Bullish on Indianapolis
Indianapolis’ healthcare sector made the acquisitions attractive, said Daniel Prosky, Triple Net’s managing director of healthcare properties.
“I like Indianapolis,it’s a real big healthcare town,” he said. “The city of Indianapolis serves not only the entire state of Indiana, but even neighboring states. Both of these sets of buildings are on (a healthcare) campus with very strong operators.”
WellPoint Inc., the largest health insurer created from the $16 billion acquisition of Woodland Hills-based WellPoint Health Networks Inc. by Indianapolis-based Anthem Inc. in 2004, is a major player in Indiana.
And Triple Net’s been involved with WellPoint/Anthem. In July, Triple Net spent $100.8 million for 220 Virginia Ave., an Indianapolis office complex that’s occupied by Anthem Insurance Cos., a WellPoint business unit.
Triple Net invests in real estate on its own and also pools together investors for buys. The company owns and manages more than 30 million square feet of space, mostly office buildings.
The company brought Prosky on board in March to jump-start NNN Healthcare, a few months after it decided to jump into buying medical space.
Prosky is a veteran of Health Care Property Investors Inc., a real estate investment trust that moved from Newport Beach to Long Beach in 2004.
“That’s been my background for the past 14 years,” Prosky said. “The goal is to get very big, nationwide.”
Medical buildings are more resistant to a recession, according to Prosky.
“In good times, in bad times, medical rents always have a slow, steady growth,” he said.
Triple Net has done medical buys in the past. But Prosky said they were tenant in common deals, when wealthy investors pool together to buy properties,instead of real estate investment trust deals.
NNN Healthcare plans to invest in several types of medical space, Prosky said. Those include medical office buildings, clinics, surgery centers, hospitals and assisted living, along with other office facilities geared toward healthcare.
The unit’s looked at medical space in Southern California. But they’ve been too expensive based on capitalization rates,the expected return from rents and fees.
Other markets NNN Healthcare is looking at include the Mid-Atlantic states, the Midwest and Texas, he said.
“You can kind of go in below the radar and get better (capitalization) rates” in cities in those areas, Prosky said.
