Healthcare knowledge helped broker sale of California MOB

The Sacramento Healthcare team of Bill Swettenham and Eric Ortiz used its healthcare real estate smarts to help Dignity Health partner with Blue Sky Real Estate to acquire a 95,000-square-foot specialty care center in Carmichael, Calif. last fall.

There are a lot of important distinctions between healthcare real estate (HRE) and other types of commercial real estate. Nobody knows that better than Bill Swettenham and Eric Ortiz, of Colliers’ Sacramento office. Now called the Swettenham Ortiz team, their combined knowledge and efforts helped them successfully broker the sale of a mission-critical medical office building (MOB) in Carmichael, Calif. for client Dignity health and with new partner Blue Sky Real Estate.

“Our experience in the HRE sector helps us understand our clients’ needs and work with them to provide creative solutions,” says Bill Swettenham, Colliers Executive Vice President.

Colliers Senior Vice President Eric Ortiz, agreed, noting, “We’ve been in the healthcare arena for a long time, so we understand what makes healthcare different than other kinds of commercial real estate.”

Swettenham has worked with Dignity Health for more than 20 years. Six years ago,. Ortiz partnered with him to expand their representation and services. In addition to Swettenham and Ortiz, the team has three additional members on the account, Blake Bouldin, Bre Cusick and Tyler Nielsen.

The team has managed a wide array of real estate transactions for their client, including a major 125,000-square-foot build-to-suit project in downtown Sacramento and the acquisition of a 30-acre hospital site. The team works on a range of transactions, including building acquisitions and dispositions, leasing and fair market value studies. They are active throughout California and Nevada and are now assisting Dignity’s parent company CommonSpirit in other states. CommonSpirit Health is one of the largest health systems in the nation with more than 1,000 care facilities, including 137 hospitals, in 21 states.

Prior to this transaction the team had never worked with Blue Sky Real Estate. Swettenham and Ortiz first met the firm’s principals at a national Building Owners and Managers Association International (BOMA) MOBs + Healthcare Real Estate Conference three years ago. Founded in 2017, by 30-year HRE veteran Philip Silverman, the New York City-based firm focuses on delivering real estate solutions to healthcare, educational and other mission-driven organizations.

Swettenham noted, “When we first met Blue Sky, we were impressed with their unique programs for working with hospitals and health systems and felt they would be a good fit for Dignity and 6555 Coyle Ave., an MOB on the Mercy San Juan Medical Center Campus in Carmichael, Calif. about 12 miles northeast of Sacramento.”

The three-story, 95,000-square-foot facility houses the local operations of Mercy Medical Group, a service of Dignity Health Medical Foundation, which includes more than 375 physicians in 23 locations covering primary care and more than 34 specialties. Through Mercy Medical Group Specialty Care and other provider-tenants, the Carmichael facility offers a wide range of medical specialties, including cardiology, gastroenterology, urology, audiology, OB/GYN and women’s health, podiatry, orthopedics, and sports medicine.

“The private owner of the medical building expressed a willingness to sell in an off-market transaction,” explains Ortiz. Dignity and Blue-Sky executives then met to discuss the possibility of a mutually beneficial partnering to acquire the building.

The final deal allowed Dignity to sign a more competitive lease with a favorable option to own the building. According to Swettenham, “although a long and tedious two year process, the outcome was worth the effort.”

The transaction closed in October of last year. In addition to handling negotiations and the sale, Colliers is now providing property management and leasing services for the building. CGA Capital served as capital markets advisor and lender, and through an affiliate provided privately issued, lease-backed securities.

In a November 4 news release announcing the sale, Jennifer Tanner, Division Manager for Real Estate Transactions & Portfolio Strategy of CommonSpirit, said, “We are really excited about partnering with Blue Sky, a truly unique company focused on providing benefits to not-for-profits, to improve both the building and, more importantly, our patients’ experience – especially in today’s challenging environment.”

Ortiz noted, “Dignity is pleased now that they have control over the property.”

Chief Operating Officer of Blue Sky Joel Papo noted, “Blue Sky’s acquisition of the property allows for a restructuring of the leasehold to lower occupancy costs. It also creates new benefits and improved outcomes for Dignity Health, allowing it to strengthen its service to the local community.”