Project Description

Katy Medical Arts Center

1331 W Grand Pkwy N
Katy, TX 77493
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Property Type:
Multiple Tenant Medical Office Building

Square Footage:
61,082

Major Tenants:
Katy Internal Medicine Associates, Katy Cardiology Associates, Solis Mammography of Houston, Texas Oncology-Katy, Houston Eye Associates

Highlights

•  61,082-square foot, 100 percent occupied medical office building located outside of Houston in Katy, Texas

•  Twenty-one tenants including Katy Internal Medicine, Katy Cardiology Associates, private-practice tenants, as well as occupants with a national presence

•  Reflects a national trend occurring in the healthcare real estate marketplace | Physician groups selling their practice to an investor to gain access to capital quickly

•  Significant value was added to the property by securing longer lease terms, fixed rent escalations, and converting gross leases to triple-net (NNN) leases

•  Inclusive of this transaction, Lollio and Niedergang have faciliated the sale of eight medical office buildings in the Houston market over the last 36 months | Totaling $116 million within the Houston MSA

Print Details

Contact Agents:

Scott Niedergang Managing Director Direct: (312) 338-7060 Cell: (312) 342-4495 scott.niedergang@cushwake.com
Gino Lollio Managing Director, Healthcare Advisory Practice | Capital Markets Direct: (312) 338-7061 Cell: (239) 810-4714 gino.lollio@cushwake.com

Texas Broker of Record:

Teddy Leatherman

Summary

Gino Lollio and Scott Niedergang of Cushman & Wakefield’s Healthcare Capital Markets team have facilitated the sale of the Katy Medical Arts Center in Katy. The 61,082-square-foot medical office building is fully occupied by a range of healthcare tenants that provide primary care, ophthalmology, cardiology, podiatry, lab, endovascular surgery, mammography, hand and general surgery, nephrology, oncology, imaging, dermatology, and gastroenterology services. The mix of tenants allows for a strong referral network within the facility.

Katy Internal Medicine and Katy Cardiology Associates are the largest tenants in the building, occupying 18 percent and 10 percent of the gross leasable area, respectively. The abundance of private-practice tenants (not employed by a health system) allows for future credit enhancement, should they be acquired. Occupants with a national presence include LabCorp, US Oncology, and Quest Diagnostics.

The seller of the asset, Katy Med-Arts Partners Ltd., was a partnership of more than 20 physicians associated with practices occupying the building. Prior to going to market, Cushman & Wakefield consulted these physicians on approaching their tenants to negotiate lease terms that would maximize the value of the building upon sale. By securing longer terms, fixed rent escalations, and converting gross leases to triple-net, significant value was added to the property. The buyer is a private equity-backed healthcare real estate investor.

Inclusive of the Katy Medical Arts transaction, Gino Lollio and Scott Niedergang have facilitated the sale of eight medical office buildings in the Houston market over the last 36 months. This equates to an aggregate sales volume of $116 million within the Houston MSA. Previous transactions include a portfolio sale of Memorial Hermann and UT Physicians assets in Sugar Land and Richmond for $58 million and the $40.4 million sale of a Memorial Hermann Surgery Center and Rehab Hospital in Katy.

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