Taking a break from doctoring sick babies and administering anesthesia, Mednax jumped into the distressed real estate market by purchasing a Sunrise office building in a short sale for a 30 percent discount on its mortgage.
TMW Weltfonds 1500 Concord Terrace, an affiliate of Prudential Real Estate Advisors and TMW Property Funds, sold the 188,746-square-foot office building to 1500 Concord Terrace LLC, which is part of Sunrise-based Mednax (NYSE: MD), for $18.5 million.
According to data from commercial mortgage-backed securities (CMBS) analysis firm, the securitized loan on the building had $26.5 million outstanding in March, and nopayments have been made in over a year. It was last appraised at $13.2 million last year.
Mednax leased 33,204 square feet in the building, which is near its headquarters at 1301 Concord Terrace, according to Trepp. As of March 2010, the building was 19 percent occupied.
TMW Weltfonds bought the building in 2006 for $40.8 million – meaning its value declined 55 percent in five years. The building suffered a devastating blow in 2009 when Canadian telecommunications giant dumped its lease for 177,000 square feet.
Meanwhile, Mednax has been expanding, with acquisitions of medical practices,and has plenty of cash.
With each acquisition, the company needs to grow the size of its corporate departments, and the new building will house that expansion, said Bob Kneeley, VP of investor relations at Mednax.
“We are continuing to grow and add a lot of practices around the country, which means providing adequate support for those practices,” he said.
Kneeley said the company would not fill up the building immediately. It plans to use it for incremental growth as it maintains its current headquarters. The company has no plans to lease space there.