ORION Investment Real Estate facilitated the largest single asset medical office transaction of 2012 in Metro Phoenix.
Archway Holdings Corp. bought Arrowhead Health Center in Glendale for $19.86M from VCC Healthcare Fund, LLC, an entity controlled by Ventas REIT, the largest healthcare real estate investment trust in America.
Arrowhead Health Center, formerly known as Arrowhead Orchards Medical Office Building, is comprised of two, state-of-the art medical buildings totaling 103,216 SF plus a number of fully improved pads. The institutional quality buildings, which have been heralded as among the most luxurious medical office buildings in Arizona, were built in 2002 and 2006.
The property is adjacent to the 217-bed Arrowhead Hospital in Glendale’s affluent Arrowhead Ranch submarket.
“Arrowhead Health Center is a unique asset – it is the only fee simple, Class A medical office building on the Arrowhead Hospital Campus,” said ORION Vice President Braxton Glass. “Due to the property’s current vacancy, this was a rare opportunity to purchase such a quality asset at a discount to replacement cost.”
The subject property is currently 65% leased and provides an opportunity to increase cash flow by leasing up the asset, taking advantage of its superior income demographics, location, design, strong tenant demand and tight supply.
This is the fourth such asset in Metro Phoenix that Archway has purchased in the past 10 months. Archway is currently in the process of repositioning approximately 400,000 SF of medical office space in Arizona.
“We view vacancy, in sub-markets with appropriate demographics, as an asset in this new healthcare paradigm where small healthcare practitioners are being replaced by large practice groups that will be the likely ones to continue to thrive, thereby creating a premium for large contiguous square footage” said Archway President Sean Moghavem.
Glass added: “Archway’s acquisition of Arrowhead Health Center positions them extremely well from a competitive basis at this hospital complimenting Archway’s existing holdings; this acquisition represents an excellent opportunity to add value through repositioning.”
Commercial real estate advisory firm Lucent Capital, which has arranged $40M of financing for various Arizona product in the past 14 days, arranged extremely low cost financing for Arrowhead Health Center, LLC, for the acquisition and repositioning.