Welltower Sells Endeavor Chicagoland Ground Leases

Real estate investors are continuing to make moves in Chicago’s health care sector after a busy start to the year.

Publicly traded medical property specialist Welltower cashed out of two ground leases in the Chicago suburbs last week, public records show.

Toledo, Ohio-based Welltower sold the Endeavor Health Elmhurst Hospital ground lease at 133 East Brush Hill Road in Elmhurst and another ground lease tied to an Endeavor medical office complex at 303 West Lake Street in Addison for a combined $57 million. Endeavor Health, an Evanston-based hospital system that owns the hospital and medical office building at each site, bought out the ground leases, according to DuPage county records.

The hospital is in the early stages of a $100 million modernization project, CBS news recently reported.

Welltower bought the land tied to the ground leases in 2018 for $56.8 million, records show. But since then, the company has shifted to focusing on senior living communities rather than medical facilities, Welltower CEO Shankh Mitra said in an earnings call last year. The company owns 2,500 properties across the U.S., Canada and the United Kingdom, according to its website.

Representatives of Welltower and Endeavor did not respond to requests for comment.

Endeavor appears to be taking control of its own future while another hospital group in the area struggles to find its footing under shifting ownership.

Weiss Memorial Hospital in Uptown was shut down by owner Resilience Healthcare last year after its Medicaid reimbursement was terminated due to compliance issues. The closure came as another property in the same Resilience portfolio, West Suburban Hospital, is also in a precarious situation.

The issues stem from a legal dispute over more than $89 million in unpaid real estate debt tied to the two properties.

Princeton, New Jersey-based Resilience Healthcare allegedly defaulted on the $67 million loan note for both properties. That led to a lawsuit filed by the hospital’s former owner, El Segundo, California-based Pipeline Health, which claimed it bought the properties back via credit bid after the default.

Despite those challenges, the overall medical real estate market in Chicago has had a busy start to the year.

In January, Irvine, California-based IRA Capital bought the ground lease for the Advocate Health Care medical office building at 3000 North Halsted in Chicago’s Lakeview neighborhood from Nashville-based Healthcare Realty Trust for $56 million.

Then in March, Scott Goodman’s Farpoint Development, in a joint venture with Dallas-based Landes Group, bought a medical office building at the Silver Cross Hospital Campus in suburban Chicago’s New Lenox for $88 million.

In the same month, four Chicagoland senior living communities traded for a total of $217 million, with three of the four sales completed at a markup from their prior sale price.

Plus, Skokie-based private equity firm Cascade Capital Group sold two post-hospital rehabilitation centers, The Grove at Evanston and The Grove at The Lake, for a total of $32.9 million, also in March.

Rounding out the recent activity, New York-based CBRE Investment Management purchased the 149-unit Belmont Village Senior Living Lincoln Park facility on Chicago’s North Side from Houston-based Belmont Village Senior Living for $151 million earlier this month.