by Ashley Fahey
At its midtown site, Pappas Properties will deliver about 280,000 square feet of medical outpatient space over the next two years for Atrium Health adult specialty centers, including Sanger Heart and Vascular Institute, neurology and digestive health.
A publicly traded REIT is now the majority owner of a midtown Charlotte medical office development after a financing deal recently closed.
Toledo, Ohio-based Welltower Inc. (NYSE: WELL), a real estate investment trust that primarily invests in senior housing and medical office, provided capital in exchange for a 75% ownership in Charlotte-based Pappas Properties’ midtown mixed-use project, which includes two buildings anchored by Atrium Health that will measure 281,148 square feet at buildout.
Terms of the deal were not disclosed. In December, Welltower disclosed it was under contract with Pappas to acquire the 75% ownership stake in the two medical office properties, which have a 15-year term agreement with Atrium.
The $250 million, Pappas-led development is on Kenilworth Avenue, between Greenwood Cliff and Pearl Park Way. Charlotte-based Atrium will open specialty centers at the site, including heart and vascular, neurology and digestive health. Elsewhere on the site, which measures more than 5 acres, construction is wrapping up on the 58,697-square-foot Charlotte Regional Realtor Association headquarters. Future development is likely to include additional parking, more office space and a 150-room hotel with a rooftop bar.
The medical office buildings are expected to deliver in the second and third quarters of 2020.
Welltower and Pappas have also formed a joint venture for potentially more development opportunities in the region, according to JLL Healthcare Capital Markets, which secured debt and equity for Pappas Properties.
Mindy Berman and Louis Stephens at JLL represented Pappas in the deal. Berman, managing director at JLL, said in a statement that “state-of-the-art clinical outpatient properties” aligned with “leading health systems” attract the strongest and most competitive interest from health-care real estate investors.
Welltower owns more than 1,400 properties in the U.S., Canada and United Kingdom. The REIT has become an active investor in the Triangle, where it’s spent more than $100 million in acquiring several medical office and senior-living properties in recent transaction.