May 25, 2018
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National investment firm pays $19 million for central Maine medical buildings

By Darren Fishell, BDN Staff

OAKLAND, Maine — A national medical real estate investment company has purchased a $4.3 million building leased by MaineGeneral Health at FirstPark in Oakland, adding to its $14.7 million acquisition in February of another building leased by the group that opened a new hospital in Augusta last year.

Dan Greenstein, a broker with CBRE The Boulos Co. in Portland, which brokered the deals, said buyers such as Nashville-based Montecito Medical Operating Co., which acquired the two properties, increasingly have looked to smaller markets like Maine as yields in primary markets such as Los Angeles and New York continue to shrink.

“Historically, it seemed that most Maine properties were bought by Maine investors, or at least northern New England investors,” said Greenstein, who has worked as a commercial real estate broker in Maine for 29 years. “I think in this last real estate cycle we’ve seen a lot more investors from not only further out on the East Coast, but also on the West Coast. If you look back 10 years ago, they wouldn’t have considered something like this.”

Chris Conk, principal at Montecito, said it is his company’s first move into New England and he hopes to look to other areas in the region for future acquisitions.

“What we look for is solid institutions with good credit and a good operating history,” Conk said. “From what we could gather, [MaineGeneral] is the leader in the region.”

Moody’s Investors Service in September downgraded $281 million in bonds the hospital issued in 2011. Michael Koziol, the hospital’s chief financial officer, said at the time that the hospital had no immediate plans to take on more debt and he expected the health care network would have time to recover from the downgrade he attributed to cost anomalies associated with opening the new hospital in the fall of 2013.

Greenstein, who represented seller Harper’s First Park LLC, said the $14.7 million deal that closed in February in Augusta gained Montecito’s initial interest.

“They typically don’t buy them this small,” he said, referring to the $4.3 million FirstPark purchase.

Montecito, which relocated to Nashville in February, said in a news release that it invested $90 million in medical office buildings last year, adding to its $600 million portfolio of medical office buildings. The company says on its website that it has $1 billion in ready capital to invest in medical buildings.

MaineGeneral’s 20,000-square-foot building at FirstPark hosts laboratory services, an area for women to undergo mammograms and bone density screenings and another area for orthopedic and rehabilitation services. The Augusta building hosts the health care network’s Musculoskeletal Center, at 15 Enterprise Drive, and previously was owned by Maine developer Kevin Mattson through Lot 18 LLC. Use of the buildings will not change.

Greenstein said demographic trends and national health care reform have increased investor interest in medical buildings.

Brad Jackson, executive director of the Oakland-based FirstPark, a business park founded in 1999 and supported by $6.9 million from 24 central Maine municipalities, said the deal is “encouraging” for the park.

“It suggests that a developer can get a return on investment here in FirstPark,” Jackson said.

Jackson said the park has nine lots sold, five lots with utilities for sale and nine other lots with no utilities that remain open. He said all of the park’s buildings are occupied.

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