Kaiser pays $67M for medical office building in Santa Clarita

Deal represents 30% discount to last sale price

Kaiser Buys Santa Clarita Office Building At 30% Discount to Last Sale

From left: Global Net Lease CEO Jim Nelson, Kaiser Foundation Health Plan CEO Greg Adams and 27027 Tourney Road in Valencia (Getty, Global Net Lease, Kaiser Foundation Health Plan, Google Maps)

Kaiser Foundation Health Plan has paid $67 million for a 223,900-square-foot medical office building in Santa Clarita from an entity tied to Global Net Lease, according to property records. The sale came out to about $300 per square foot. 

The deal represents a roughly 30 percent discount compared to what Global Net Lease paid for the office building in 2014. 

American Realty Capital Global Trust, which merged to form Global Net Lease in 2016, paid  $96 million, or about $430 a square foot, for 27027 Tourney Road in Valencia in December 2014, according to a release at the time. 

Global Net Lease and Quest Diagnostics did not respond to a request for comment.

The sale is higher than recent office trades in more traditional office markets, like Glendale. In December, Kennedy Wilson sold a 441,000-square-foot complex at 400 and 450 North Brand Boulevard for $60 million, or $136 per square foot. 

The transaction also highlights an environment in Southern California where one in five offices are sitting empty and companies like Kaiser Foundation are finding it more compelling to buy than rent office space.

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Kaiser Foundation’s for-profit arm Kaiser Permanente, which is one of the biggest medical employers in the U.S., signed a new contract with its healthcare union in November, after one of the biggest strikes in the medical sector in US history.

The new contract was costly for the company, offering Kaiser’s employees 21 percent wage increases over four years, among other benefits, Reuters reported.

The building has been empty since Quest Diagnostics, one of the biggest providers of lab testing services, did not extend its lease last year, according to Morningstar, which cited servicer commentary on a loan tied to the property. 

“This property is in process of being released from the collateral and is waiting on final approvals,” according to the ratings agency.

In its third-quarter results published in November, Global Net Lease said it “focused on strategic dispositions last year,” totaling $383 million year-to-date, to help pay down debt.