CHI Memorial has sold its Chattanooga Heart Institute building for $17.6 million.
The Chattanooga hospital will continue to lease back the 24-year-old medical facility from the new owner - a real estate investment partnership organized by Physicians Realty. The sale is similar to the $9 million purchase also made last year through Physicians Realty of Memorial's 36-year-old Missionary Ridge Medical Tower.
Del Mar Deeni Taylor, chief investment officer for the Milwaukee-based Physicians Realty, said last week his company has been involved in buying more than 50 CHI offices and medical facilities across the country, including the two on Memorial's main campus in Glenwood. CHI has signed 10-year lease agreements for the facilities with Physicians Realty.
"We have had a good relationship with Catholic Health Initiatives, buying many of their properties across the country, and this is another one associated with CHI in Chattanooga," Taylor said.
The CHI properties are among more than 270 medical office buildings and related properties that Physicians Realty owns throughout the United States.
Memorial spokeswoman Karen Long said the hospital sold the two medical office buildings at its main Glenwood facility as "part of a long-term effort to obtain maximum value from Catholic Health Initiative's owned and leased real estate." According to the Hamilton County Assessor's Office, the buildings collectively have 306,766 square feet.
"Last year, a comprehensive evaluation was completed on all non-hospital real estate, including outpatient medical office buildings, ambulatory surgery centers, ambulatory care centers, administrative facilities and non-core real estate," Long said. "As a result, Missionary Ridge Medical Tower was sold, and this is another component of that comprehensive plan. CHI Memorial entities will remain in their current spaces."
CHI is selling and leasing back many of its medical offices and facilities as part of its strategy to improve its financial performance.
Catholic Health Initiatives, the parent company of Memorial Hospital in Chattanooga, reported a loss of $666.5 million in the fiscal year ended June 30, 2016, the most recent financial year for which data is available. At its Tennessee facilities, CHI reported earnings before interest, depreciation, amortization and restructuring of nearly $30.6 million in fiscal 2016, down from $51.1 million in the previous year.
In its most recent annual report, CHI said it is committed to cutting annual throughput costs by $800 milion.
CHI has yet to report its financial results for the fiscal year ended June 30, 2017.
Contact Dave Flessner at dflessner@timesfreepress.com or at 423-757-6340.