The Chicago area’s largest medical-care provider is looking to shed more properties to fund expansions and facility improvements at its hospitals.
Advocate Health Care has hired real estate firm CB Richard Ellis Inc. to sell nine physician office buildings at seven locations throughout the Chicago area, the Oak Brook-based health-care company has confirmed.
“They could be sold to individual physicians who are tenants or a company that has good experience at managing these kinds of properties,” said Advocate spokesman Dan Parker.
“This is consistent with Advocate’s intent to access capital to reinvest in our facilities.”
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The proposed sale comes as Advocate entertains bids for the Warren Barr Pavilion, a 271-bed senior housing and long-term care facility for the elderly on Chicago’s Near North Side.
Advocate also is considering several options that include a possible sale of Ravenswood Medical Center in Chicago. The hospital lost $35 million last year.
The sale of the medical office buildings could reap more than $60 million for Advocate, real estate observers say. Advocate, however, wouldn’t comment on a potential sale price or prospective bidders.
Medical office buildings are considered solid investments for real estate firms, because physicians are typically affluent and loyal tenants who rarely move their locations.
“They are 100 percent leased and they are on [hospital] campus locations, which is a strong attraction,” said William Novelli of CB Richard Ellis’ Chicago-area office.
Indeed, most of the medical office buildings up for sale are conveniently located near Advocate hospitals. Advocate is selling two offices in Barrington; two in Downers Grove; and single facilities in Chicago, Oak Lawn, Hazel Crest, Naperville and Crystal Lake.
Advocate operates nine hospitals in the Chicago area.
Grant draws interest: Five new potential suitors have emerged for Grant Hospital after a Cook County Circuit Court judge reopened the bidding for the hospital early this month.
They are: Illiana Surgery & Medical Center of Munster, Ind.; Physicians Hospitals & Health Care Centers of Chicago; Children’s Memorial Hospital of Chicago; St. Catherine Hospital of East Chicago, Ind.; and Denver-based for-profit hospital company Merit Health Systems.
Bidding was rekindled after Healthcare Transactions Inc. was unable to secure financing for Grant and lost its exclusive contract to buy the hospital. Healthcare Transactions, which includes a Chicago-area cardiovascular surgeon and a New Jersey financier as its principals, remains interested, however.
Attorneys for the hospital and its creditors are hoping a deal can be worked out in the next month that would maintain Grant’s status as a hospital.
“It’s safe to say there is sufficient interest in this hospital as a going concern,” said Edward Weil, attorney for Grant’s creditor, Sodexho Management Inc., which provides food service to the hospital. “Talk of shutting Grant down immediately has been pretty much put to rest, for now.”
Grant is trying to avoid succumbing to a fate similar to its sister facility, Edgewater Medical Center, which closed last month amid millions of dollars in losses and debts owed to government insurers as a result of an alleged health-care fraud ring. Edgewater is in federal bankruptcy court.
There are no fraud allegations at Grant.