New Construction, Acquisitions and Dispositions

9 Months Ended

Sep. 30, 2020

Business Combinations [Abstract]

New Construction, Acquisitions and Dispositions

(4) New Construction, Acquisitions and Dispositions

Nine Months Ended September 30, 2020:    

New Construction:

In September, 2019, we entered into an agreement whereby we will own a 95% non-controlling ownership interest in Grayson Properties II L.P., which will develop, construct, own and operate the Texoma Medical Plaza II, an MOB located in Denison, Texas.  This MOB, which is scheduled to be completed in late 2020, will be located on the campus of Texoma Medical Center, a hospital that is owned and operated by a wholly-owned subsidiary of UHS.  A 10-year master flex lease was executed with the wholly-owned subsidiary of UHS for 40,000 rentable square feet, representing over 50% of the rentable square feet of the MOB.  The master flex lease commitment is subject to reduction upon the execution of third-party leases on up to 20,000 rentable square feet of the first and second floors of the three-story MOB, and 20,000 rentable square feet on the third floor.  In April, 2020, a new, 122-month lease was fully executed with a third-party tenant for approximately 26,000 rentable square feet on the first floor of the MOB.  As a result, the master flex lease commitment was reduced to 20,000 of rentable square feet on the third floor of the MOB.  After giving effect to this new lease, 61% of the rentable square feet of the MOB is under lease agreements (including the remaining master lease space).    Effective June 1, 2020, a $13.1 million third-party construction loan (non-recourse to us) was obtained by the LP, which is scheduled to mature on June 1, 2025 and has an outstanding loan balance of $10.4 million as of September 30, 2020.  Additionally, we have committed to invest up to $4.8 million in equity or member loans in the development and construction of this MOB, none of which has been invested as of September 30, 2020.  We account for this LP on an unconsolidated basis pursuant to the equity method since it is not a variable interest entity and we do not have a controlling voting interest.  

In July, 2019, Des Moines Medical Properties, LLC, a wholly-owned subsidiary of ours, entered into an agreement to build and lease a newly constructed behavioral health care hospital located in Clive, Iowa.  The lease on this facility, which is triple net and has an initial term of 20-years with five 10-year renewal options, was executed with Clive Behavioral Health, LLC, a joint venture between UHS and Catholic Health Initiatives - Iowa, Corp. (d/b/a Mercy One Des Moines Medical Center). Construction of this hospital, for which we have engaged a wholly-owned subsidiary of UHS to act as project manager for an aggregate fee of approximately $750,000, is expected to be completed in late 2020 or early 2021. The hospital lease will commence upon issuance of the certificate of occupancy. The approximate cost of the project is estimated to be $37.5 million and the initial annual rent is estimated to be

approximately $2.7 million.  We have invested approximately $25.0 million for land and the development and construction costs of this hospital as of September 30, 2020 (including accrued costs at September 30, 2020).

Acquisitions:

There were no acquisitions during the first nine months of 2020.  

Dispositions:    

There were no dispositions during the first nine months of 2020.

Nine Months Ended September 30, 2019:

Acquisitions:

There were no acquisitions during the first nine months of 2019.

Dispositions:

There were no dispositions during the first nine months of 2019.