MINNEAPOLIS (October 16, 2024)—Davis, a leading healthcare real estate development, investment and management firm, has made a significant investment acquiring WestHealth, a three-building, 201,000-square-foot outpatient medical center in Plymouth, MN. The portfolio, located at 2805, 2855 and 3005 Campus Drive, comprises two outpatient medical buildings, an ambulatory surgical center (ASC) and an emergency/urgent care facility.
The acquisition, at nearly $360 per square foot and an overall price of $72 million, is one of the largest single asset sales in the last 12 months in the Minneapolis/St. Paul marketplace.
At the time Davis acquired the asset, the portfolio of buildings was 96% occupied. The three connected buildings comprising the outpatient medical complex include:
- 2805 Campus Drive, a four-story, approximately 77,340-square-foot medical building with 19,300-square-foot floor plates.
- 2855 Campus Drive, a 6-story outpatient medical building totaling 103,500 square feet and featuring 17,240-square-foot floorplates.
- 3005 Campus Drive, a single-story, 20,000-square-foot emergency department building. The emergency/urgent care facility was developed in 2013.
“WestHealth is a trophy medical building asset in the Minneapolis/St. Paul market. It stands alone as the premier outpatient system hub for its consolidation of providers and diverse selection of services,” said Mark Davis, CEO, Davis. “As a longtime partner of Allina Health, Davis is excited to continue helping them provide expert care to our great community.”
The anchor tenant of the medical complex is Allina Health (AA- S&P, A1 Moody’s, AA- Fitch). It occupies approximately 73% or 146,000 square feet of space within the complex, including the ASC. Allina owns or operates 12 hospitals and more than 90 clinics throughout Minnesota and Western Wisconsin. WestHealth has been one of Allina Health’s most important ambulatory assets in its clinical portfolio for the past 25 years. Strategically located in the western suburbs, it sits on the main ring highway of I-494, providing convenient access across the entire west metro.
The relationship between Davis and Allina Health dates back more than two decades. As services provided by Davis have expanded over that time to include development, investment, property management and ownership, Allina Health has been both a client and anchor tenant of numerous projects. It was only natural when this asset became available for acquisition that Davis, a tenant-friendly owner well-known by Allina Health, would pursue the property.
“We look forward to our continued partnership with Davis, a company that understands the unique needs of healthcare. This facility allows Allina Health patients in the west metro access to expert care, close to where they live,” says David Joos, Allina Health’s vice president of operations in the Southwest region.
In addition to the ASC, the key medical specialty practices located within the three-building complex include Orthopedics, Oncology, Emergency/Urgent Care, ENT, Pulmonology, Cardiology, and Neurology, among others.
“The acquisition of WestHealth is the ideal addition to our Class “A” medical building portfolio which prioritizes credit tenancy and high investment specialty services,” Davis added. “The strategically located campus makes it an ambulatory care mainstay for many years to come.”
Financing was arranged by Eric Gundersen of Alerus Financial as well as long-time Davis partner Healthpeak. The transaction was a complicated one to complete and has been in progress for nearly a year. The presence of Allina Health as an anchor tenant, and the attention to detail exhibited by Allina Health representative Brian Bruggeman, CCIM, SIOR, Colliers, mitigated many potential challenges.