Healthcare: Stable Development to build medical office complex

BY TONY ILLIA

Southern Nevada’s real estate downturn has produced few new projects lately. A scarcity of recent development activity makes Stable Development’s June 9 groundbreaking of a new $25 million medical office complex in Henderson appear remarkable.

The 6-year-old, Las Vegas-based privately owned developer is building 115,000 square feet, on 8.5 acres, at St. Rose Parkway and Seven Hills Drive. Canadian-based Ledcor is the general contractor.

Seven Hills Plaza is 75 percent preleased with medical-related tenants such as ENT Consultants of Nevada, an ear, nose and throat specialist occupying 6,000 square feet inside one of the buildings. Health care employment increased 4.7 percent between April 2011 and April 2010, adding 4,300 jobs statewide, the Nevada Department of Employment, Training and Rehabilitation reports.

“Strong early leasing commitments were critical to the project acquiring financing,” Stable Chief Operating Officer Rob Silecchia said. “Average tenant leases are 10 years, which is an uncommonly long commitment given recent office market activity.”

Stable uses an equity-leasing program to attract businesses. The company’s shared equity model allows professionals to own without a big cash investment. Tenants become project partners, with shared distribution of net cash flow, mortgage interest tax deduction and depreciation tax benefits. They also benefit from rental cash flow that can effectively reduce the monthly cost of their office by as much as 25 percent. Stable declined to disclose rent rates.

Stable shoulders the bulk of the risk. The company acquires the land, provides all debt and equity development capital, designs and constructs the building, and guarantees all real estate loans. The company also oversees leasing activity and property maintenance.

Tenants agree to occupy the building, pay their rent and underwrite any special interior upgrades to their space. It’s the same thing most tenants do but without the added benefit of ownership and tax perks.

Stable and its tenant partners enter a limited liability corporation created specifically for the project. Development proceeds are divided 60-40 between Stable and tenant partners.

The equity-leasing program is the brainchild of Stable founder Lance Bradford, who may be known locally for a five-year stint as president of Vestin Mortgage. The company’s lending and fund-management practices were often controversial, resulting in investor lawsuits for, among other things, converting mortgage funds into publicly traded real estate investment trusts. Bradford left Vestin to launch Stable Development in 2005.

Meanwhile, Seven Hills Plaza calls for a quartet of concrete tilt-wall buildings from three to two stories tall sheathed in glass and stone with shade overhangs. The project’s initial phase consists of two buildings totaling 67,692 square feet. The project will create up to 100 jobs during construction, with another 300 permanent positions upon completion. The first phase is scheduled to finish in early 2012, followed by another phase with two more buildings. The medical office complex is expected to reach completion in mid-2014.

“Of the office square footage occupied in 2010, more than half was taken by businesses involved in health or professional services,” Colliers International research director John Stater said. “Health companies and insurance companies collectively took one quarter of the office space occupied in 2010, highlighting the potential impact of the new health reform law on Southern Nevada’s office market.”

PROJECTS

George Gekakis Inc. recently broke ground on a $16.4 million, 72-unit senior apartment complex, on 3.4 acres, at 4880 Santa Barbara St. in Las Vegas. The project, designed by DLR Group KKE, consists of two three-story buildings with a clubhouse and pool. The 97,000-square-foot complex is scheduled to finish in August 2012.

Hardy Construction is performing $11.7 million in upgrades to the 375-acre Sunset Park at 2601 E. Sunset Road in Las Vegas. The project, designed by WLB Group, will complete a walking loop around the lake with exercise stations and lighting and will add a new pedestrian plaza and remodeled boat dock. Other enhancements include a new playground and improved picnic shade structures. The improvements, which encompass 75 acres, will finish in late 2012.

MILLION-DOLLAR DEALS

Lightstone Acquisitions bought 23.53 acres of vacant land at Hacienda Avenue and the Las Vegas Beltway for $4.4 million, or $186,995 per acre, from City National Bank. Colliers International’s Michael Stuart and Scott Heaton represented the seller.

Strategic Realty Capital bought the 36-year-old, 140-unit Arville Park apartments, on 5.68 acres, at 2600 Arville St. in Las Vegas for $4.5 million, or $32,143 per unit, from Blue Valley Apartments Inc. CB Richard Ellis’ Spencer Ballif and Jeffrey Swinger represented the seller.

[lvbusinesspress.com]

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