University Health’s Board of Managers voted to enter a $50 million deal to acquire two medical towers next to a shuttered CHRISTUS hospital in the South Texas Medical Center. It could ultimately help the county’s hospital system move more of its ambulatory services out of its main hospital.
When University Health purchased CHRISTUS Health’s Santa Rosa Hospital in the South Texas Medical Center last summer, it came with 45 acres of land, including a seven- and four-story medical office building next to the hospital. The initial plan was for University Health to own the land but not the two buildings.
The towers, comprising 200,000 square feet of space, are adjacent to the vacant hospital that University Health plans on reopening as Babcock Specialty Hospital in the summer. A sky bridge connects one of the towers to the hospital.
“This is a once-in-a-lifetime opportunity,” Board Member David Cohen said. “There’s no new land coming into the medical center. Having all of our operations and our people in the relative area of the hospital and all of our other operations seems to be the most efficient and desirable way to have that. And I don’t think we would ever get an opportunity to like this again.”
Babcock is one of three hospitals University Health is in the midst of opening in San Antonio, the others being the Palo Alto Hospital on the South Side and the Retama Hospital in Northeast San Antonio.
Currently, the medical towers are 89% occupied, a large portion of that being CHRISTUS clinics and practitioners, but University Health officials expect many of them to move out once their leases expire, opening more opportunities for the hospital to decongest its services currently centered at its main hospital in the medical center a few blocks away.
University Health’s Board of Managers unanimously approved to enter into a deal to purchase the buildings on Tuesday night. The deal is scheduled to close by late February.
“You look at our campus today here, I’m not sure we have one more parking space available,” University Health Board Chair Jimmy Hasslocher said. “And I understand there’s been some strong words over that over the years. This purchase … will be a major milestone as we move forward in the history of the Bexar County Hospital District.”
The opportunity for University Health opened up because the owner of the building, a group of investors operating under “San Antonio MOB NW Medical Tower LLC,” decided to sell. University Health had dibs on purchasing the buildings because of a right of first offer provision in the original property deal.
“All of the analysis that we did over 20 years, these buildings keep on a positive cash flow, as long as we can maintain the balance of tenancy within the building,” said Christa Olvera, director of real estate facilities at University Health.
University Health is looking to use the additional space for cardiology services and testing for pre- and post-testing for transplant services, University Health president and CEO Ed Banos said.
