Acquisitions and Divestitures

9 Months Ended

Sep. 30, 2024

Business Combinations [Abstract]

Acquisitions and Divestitures

(4) Acquisitions and Divestitures

Nine Months Ended September 30, 2024:

Acquisitions:

There were no acquisitions during the first nine months of 2024.

Divestitures:

There were no divestitures during the first nine months of 2024.

Nine Months Ended September 30, 2023:

New Construction:

In January 2022, we entered into a ground lease and master flex-lease agreement with a wholly-owned subsidiary of UHS to develop, construct and own the real property of Sierra Medical Plaza I, an MOB located in Reno, Nevada, consisting of approximately 86,000 rentable square feet. This MOB is located on the campus of the Northern Nevada Sierra Medical Center, a hospital that is owned and operated by a wholly-owned subsidiary of UHS, which was completed and opened during April of 2022. Construction of this MOB, for

which we engaged a non-related third party to act as construction manager, commenced in January, 2022, and was substantially completed in March, 2023.

The master flex lease agreement in connection with this building, which commenced in March, 2023 and has a ten-year term scheduled to expire on March 31, 2033, covers approximately 68% of the rentable square feet of the MOB at an initial minimum rent of $1.3 million annually, plus pro-rata share of the common area maintenance expenses. This master flex lease agreement is subject to reduction based upon the execution of third-party leases. Additionally, during March, 2023, the ground lease for this property commenced and a right-of-use asset and lease liability was recorded in connection with this lease. The cost of the MOB is estimated to be approximately $35 million, approximately $30 million of which was incurred as of September 30, 2024.

Acquisitions:

During the third quarter of 2023, we acquired the McAllen Doctor's Center, an MOB located in McAllen, Texas, for a purchase price of approximately $7.5 million. The building has approximately 79,500 rentable square feet and is 100% master leased to McAllen Hospitals, L.P., a wholly-owned subsidiary of UHS. The triple-net master lease is for twelve years and is scheduled to expire on August 31, 2035. McAllen Hospitals, L.P. has the option to renew the lease term for three consecutive ten-year terms. The initial annual base rent is approximately $624,000. This acquisition was completed utilizing a qualified third-party intermediary as part of a tax-deferred like-kind-exchange transaction pursuant to Section 1031 of the Internal Revenue Code, as amended.

Divestitures:

There were no divestitures during the first nine months of 2023.