Scottsdale Healthcare Portfolio

Client Situation

Savills Studley was the exclusive financial advisor and consultant to Scottsdale Healthcare Corporation (Moody’s: A3) (“SHC”) with respect to the monetization of eight on-campus medical office buildings totaling approximately 400,000 square feet located in Scottsdale, Arizona. The properties, located on all three SHC campuses, had an overall occupancy of approximately 89% with 21% leased to SHC.

Consideration Analysis

The Savills Studley team advised SHC on the monetization in a two-phase process. First, Savills Studley created a strategic evaluation – estimating market value and providing its recommendation to the SHC Finance Committee. Following the financial analysis, Savills Studley advised SCH throughout the transaction, providing marketing, negotiation and disposition services.

As a result of the strategic evaluation, Savills Studley produced a Confidential Memorandum and developed a marketing strategy that leveraged the portfolio’s strengths in order to gain broad interest in the capital markets, including public and nonpublic REITS, pension fund advisors, private equity funds and offshore capital sources.

Result

The portfolio was well received by the targeted investment community. 36 investors executed confidentiality agreements, ten of which submitted terms sheets. Following a highly competitive bidding process, a winning bidder was selected at record pricing of $81.4 million. Furthermore, the portfolio price equated to a record low cap rate of approximately 5. 75% on in-place net operating income.

Through value-engineering, Savills was able to increase the sales proceeds by nearly $16 million, based on operating expense savings that the new owner could achieve almost immediately upon closing.

Summary Information

  • Property: Scottsdale, AZ
  • Transaction Size: 400,000 SF
  • Transaction Type: Hospital Monetization
  • Service Line: Healthcare