ARC Healthcare Trust III Buys MN Medical Office Building for $14.9 Million

American Realty Capital Healthcare Trust III Inc., a publicly registered non-traded real estate investment trust sponsored by AR Capital, purchased Woodlake Office Center, a medical office building in Woodbury, Minnesota, for $14.9 million, exclusive of closing costs. The seller, Kraus-Anderson Inc., is an unaffiliated third party.

The Woodlake Office Center is a Class A, two-story office building totaling 36,375 rentable square feet. The property is adjacent to Woodwinds Hospital and is 100 percent leased to Summit Orthopedics Ltd. The lease is net where the tenant pays operating expenses, including all costs to maintain and repair the roof and structure of the building, in addition to base rent. The lease has an original 13-year term that commenced in September 2009 and expires in September 2022, with rental escalations of 2.0 percent annually and three five-year renewal options. Annualized cash rental income for the initial term of the lease is expected to be $1 million.

The company funded the acquisition with proceeds from its ongoing initial public offering of common stock. At closing, an acquisition fee of $0.2 million was paid to the company’s advisor, American Realty Capital Healthcare III Advisors LLC.

Earlier this month, The DI Wire reported that the company acquired the Galesburg Medical Office Portfolio, comprised of two medical office buildings, and a seniors housing community, for $10.8 million

American Realty Capital Healthcare Trust III Inc. is a publicly registered, non-traded real estate investment trust which seeks to acquire a diversified portfolio of real estate properties, focusing primarily on healthcare-related assets, including medical office buildings, seniors housing and other healthcare-related facilities. The REIT was launched in August 2014, and as of August 31, 2015 it has raised $123.4 million of investor equity.